Impact on travel of Japanese natural disaster and nuclear crisis continues to worsen

JAPAN. The impact on the travel industry – and therefore travel retail – from Japan’s earthquake and tsunami and nuclear crisis continues to worsen.

International Air Transport Association (IATA), Director General and CEO Giovanni Bisignani commented: “Japan is an important link in global air transport. The US$62.5 billion Japanese aviation market represents 6.5% of worldwide scheduled traffic and 10% of the industry’s revenues. A major slowdown in Japan is expected in the short term. And the fortunes of the industry will likely not improve until the effect of a reconstruction rebound is felt in the second half of the year.”

Japan's 83 million passengers per year domestic market is the most exposed, IATA said. Internationally, the top international markets connecting to Japan include the US, China, South Korea, Taiwan, Hong Kong, Thailand, France, Germany, the UK and Australia. Travel retailers in Japan and those locations will be hit hard by the decline in travel to and from the crisis-ravaged country.

The most exposed market to Japanese operations is China where Japan accounts for 23% of its international revenues. Chinese Taipei and South Korea are also heavily exposed with 20% of their revenues related to Japanese operations, followed by Thailand (15%), the United States (12%), Hong Kong (11%) and Singapore (9%). France is the most exposed European market at 7%, followed by Germany (6%) and the United Kingdom (3%).

Top 10 international markets connecting to Japan; Source: IATA
IATA said: “The extent to which these travel markets weaken will be largely shaped by what happens to the Japanese economy. Many economists are suggesting that once reconstruction begins the economy will rebound, but the length of the current downturn will depend critically on developments in the nuclear power situation.”

Leading Japanese travel analyst Travel Journal International (TJI) Online this week reported a series of other negative developments in the travel marketplace, both outbound and inbound.

* Guam (a DFS stronghold in travel retail) has reported a double-digit decline in arrivals from its largest tourism source market since the earthquake and tsunami struck. Japan generates some 80% of international arrivals to Guam. According to Guam Airport immigration statistics, the tally of Japanese visitors dipped -11.3% to 3,261 on March 11, then plunged by -37.8% on March 12 to 2,576. March 13 welcomed 2,923 visitors from Japan, off -11.4%, followed by a -17.7% drop on March 14 to 2,923. On March 15, some -24.6% fewer Japanese set foot on the island, reaching 2,953.

* “A similar pattern is likely to be seen for other short-haul destinations such as South Korea and Taiwan,” TJI said.

* A manager in charge of corporate travel at a major Japanese travel agency said some 70% of domestic business trips have been cancelled and the number of overseas corporate travel plans cancelled or postponed reached into the hundreds.

* Hong Kong's Travel Industry Council reported that 238 groups with 2,853 participants have cancelled plans to visit Japan up to March 25. Still, it said that 51 groups with 1,251 participants have adjusted their itineraries to visit other regions such as Okinawa and Hokkaido. Meanwhile, Hong Kong-based EGL Tours said it cancelled tours for some 47 groups with 1,200 travellers for travel through March 20. Towa Tours, an inbound specialist in Hong Kong, said that it is bracing for a -40% drop in inbound travel.

* Indonesia-based Avia Tour reported that consumers have been asking to change their travel plans from Japan or to other Japanese destinations amid the threats of radiation. More cancellations are expected following the government's latest travel advisory warning against non-essential travel.

* Taiwan's Tourism Bureau estimates a -20% plunge in arrivals from Japan during the coming three months, representing more than NT$1 billion in lost tourism income. Taiwan last year welcomed some 1.08 million Japanese visitors, making the country the second-largest source of travellers after China. About half of Taiwanese tour groups have cancelled trips to Japan scheduled for March after the Foreign Ministry issued 'red' travel alerts against many parts of the country due to radiation concerns.

* South Korea, one of the largest source markets for inbound travel, has reported a decline in Japanese arrivals. During the past weekend, there were about 3,000 cancellations by Japanese people, but a large number from unaffected regions are still coming to South Korea as scheduled, said Seo Dae-hoon, a manager at the Korea Association of Travel Agents.

But in two or three months, it expects there will be fewer Japanese travellers as people even from the unaffected regions will share the grieving sentiment and avoid unnecessary overseas travel, he said. South Korean travel agents expect that local tourism will undergo a critical period over the next two or three months when they will have to secure new reservations by Japanese tourists.

* The Thai Travel Agents Association reported that some 70% of tours to Japan through May have already cancelled.

* Incentive groups in Malaysia, originally planning to travel to Japan, have changed their plans to other destinations due to the risk of being exposed to radiation.

* A major Singapore agency reported that 80% of the 1,000 clients scheduled to travel to Japan until mid-April have chosen to postpone their trips or switch to Hong Kong or other nearby destinations.

*Editor’s note: The Moodie Report works closely with TJI Online, the largest English-language travel trade news source in Japan. Week in, week out, it provides timely and sharp analysis of the all-important Japanese travel market – international and domestic. To subscribe please visit https://tji.tjnet.co.jp. It comes with our highest recommendation.