Will new US – Japan bilateral help boost falling demand? Access to Haneda may be key

Image: Tokyo Haneda - “Runway D” under construction
Preparing to go international (again). The new Japan-US bilateral allows for a limited number of daily flights into Tokyo Haneda where, despite congestion, there should be slots to go with this agreement: A fourth 2,500m “Runway D” is under construction (allowing movements to rise from 296,000 to 407,000) while a new “International Terminal” opens in October 2010. The only current international flights are to Seoul, Hong Kong, Beijing and Shanghai.

Last week’s announcement that Japanese and US authorities had signed a new ‘open skies’ deal will be welcomed by many, hopeful that such liberalisation will create an environment for increased competition, lower fares and thus increased traffic. According to anna.aero’s analysis of US BTS data, the number of passengers travelling between the two countries has fallen back to the levels of the early 1990s. After peaking in 2000 at over 15 million passengers, the double blow of ‘9/11′ in 2001 and SARS in 2003 reduced traffic by 25%. Despite a recovery in 2004 and 2005, traffic has been in relative freefall ever since.

Chart: US - Japan traffic 1998-2008 - Annual passengers (millions)
Source: BTS

Demand is relatively consistent throughout the year though there are annual local peaks in March and August. Traffic was already declining by around 4% in the first half of 2008 before the global economic downturn reduced demand by a further 5% in the second half of last year.

Chart: US - Japan traffic seasonality - Monthly passengers 2006-2009
Source: BTS

In the first four months of 2009, demand was down 10% versus 2008, but in May and June passenger numbers were down an alarming 20%. Compared with 2006, traffic is down over 30% during these two months.

Image: nwa plane
Northwest is the market leader for transpacific services with over 70 weekly departures, although eight of 10 routes are concentrated at Tokyo Narita.

Northwest biggest carrier in market

Analysis of schedule data for August 2009 and December 2009 confirms the relative lack of seasonality as frequencies offered by most carriers are unchanged. Market leader is Northwest with over 70 weekly departures across 10 routes. Eight of these are to Tokyo Narita with daily flights from Detroit, Honolulu, Los Angeles, Minneapolis/St Paul, New York JFK, Portland, San Francisco and Seattle.

Chart: US - Japan market - Leading airlines by weekly departures
Source: OAG Max Online for w/c 3 August 2009 and w/c 7 December 2009

Around 40% of flights are operated by Japanese carriers with most of the others flown by US carriers. Korean Air and Singapore Airlines also fly daily between Tokyo Narita and Los Angeles while China Airlines operates between Narita and Honolulu.

New deal will open access to Tokyo Haneda

Analysis of the airports served by airlines between Japan and the US reveals how dominant Tokyo Narita is as the gateway to Japan. Included in the new Japan-US bilateral is permission to operate a limited number of daily flights into Tokyo Haneda airport, which is much closer to downturn Tokyo than Narita. Haneda is currently building a fourth runway which should be operational by the end of next year when a new dedicated international terminal also is due for completion.

Chart: Busiest airports serving US-Japan market - Weekly departures in December 2009
Source: OAG Max Online for w/c 3 August 2008 and w/c 7 December 2009

This winter, there are direct non-stop services from 14 US airports to Tokyo Narita. Apart from those shown in the above table, there are also daily flights from Atlanta (Delta), Houston (Continental), Minneapolis/St Paul, Newark (Continental) and Portland. Salt Lake City services were discontinued in October.


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