Archive for the ‘Travel & Transportation’ Category

Clarifying the economic damage of the Senkakus row

Wednesday, October 17th, 2012

Prepare for descent.

Japanese conservatives contend that people should not get “emotional” about the economic consequences of the current row with China over the Senkaku islands, implying that some things are more important than money. But what exactly are the economic consequences given that since 2009 China has been Japan’s biggest trading partner?

According to the Finance Ministry, one-fifth of total Japanese exports in 2010 went to China, while the same portion was 7.7 percent in 2001. A Reuters analysis shows that Japan would suffer mightily if trade stopped, citing an annual loss of ¥12 trillion if exports went down to zero for only one month. Under such conditions, automobile companies would be the main loser. They’d lose ¥144 billion. Bank of America estimates that 25 percent of all Nissan’s profits are derived in China, 21 percent for Toyota and 16 for Honda.

Moreover, Japanese companies directly invested ¥1 trillion in China in 2011, 60 percent more than what they spent in 2009. China’s Bureau of Statistics says that as of the end of 2010 there were 22,307 joint Japan-China ventures operating in China comprising 3 million workers and accounting for 16 percent of all the country’s foreign-related companies.

Still, the sector that tends to get the most media attention in Japan is tourism, since visitors from China spend more here than visitors from any other country. According to the Asahi Shimbun, China’s state tourism agency, which controls some 5,500 travel agencies all over the country, has stopped selling tours to Japan for the time being. Cancellations of reservations already made amount to about 500 million yuan, or ¥6.2 billion.

For the big vacation week of Oct. 1, there were at least 10,000 cancellations. China said it originally expected to sell some 45,000 individual tour packages to Japan for that week. On the other hand the agency said that the number of Chinese tourists who visited South Korea during the big vacation week was 125,000, a new record. They spent the equivalent of ¥190 billion, according to South Korea’s retailers association. Department stores and duty-free shops, in particular, did booming business.

Japanese companies lose less with cancellations of Japanese tourists going to China, but the cancellations do have an effect on Japanese airlines and tour packagers. Various media have reported that there were around 52,000 seat cancellations on flights between Japan and China as of September 24, with 37,000 on ANA and 15,000 on JAL. Many of these cancellations were Japanese business travelers, who tend to pay premium prices for tickets.

Japanese tour companies suffered, too. China and South Korea are always two of the top three destinations in terms of number of Japanese tourists, and Sankei Shimbun reports there has been a 30-45 percent decrease in the number of tours to these two countries in the second half of the year compared to the same period last year. This negative effect spreads to other sectors, since tourist companies are also not bothering to advertise. They say it would just be a waste of money.

Summertime blues: no place to go or no money to spend?

Friday, August 10th, 2012

Last week, the research department of Meiji Yasuda Life Insurance released the results of its annual summer vacation survey. For the second year in a row, projected spending for summer vacation dropped from the previous year’s spending. On average, households say they plan to spend ¥82,974 this year, down from ¥84,848 last year. It is not the lowest amount on record, however. In 2008, households said they would spend ¥76,955, but that was the year after the subprime crisis and the Lehman Brothers “shock.” The next year, spending recovered but has been declining ever since.

What the roads won’t look like in the middle of August.

Yasuda hasn’t analyzed these findings, so it’s not entirely clear if the reason for the decline is lack of disposable income due to the ongoing recession or fear of spending any money because of an uncertain future. However, the amount of spending jumps considerably when children aren’t involved. Households consisting only of couples said they would spend on average ¥100,191, which is much more than it was last year. A relatively large number of couples say they will be traveling overseas.

In any case, the majority of all respondents said they would stick close to home this summer, 62 percent, to be precise. It’s the seventh year in a row that “staying at home” topped the list of answers to the question, “What do you plan to do?” Other answers (respondents can tick more than one) included “return to my home town” (39.4 percent), travel domestically (37.4 percent), and visit theme parks, public pools, camping sites, etc. Among the reasons given for staying at home this year, the most common was “to recover my strength,” followed by “it costs too much to travel.”

It’s unfortunate that Yasuda didn’t get even more detailed in this line of inquiry. For example, of the people who said they would visit their home towns, 52 percent also said they would get there by automobile. Considering the monumental “u-turn rush” traffic jams that occur during the specified holiday period, it might have been interesting to find out how many people decided not to go home because of traffic jams and crowded trains. It’s easy to blame apathy about summer vacation on economics, but logistics has a lot to do with it, too, especially when they’re qualified by financial considerations. These things all go together.

Boomer boom: Businesses tapping consumption where they can find it

Friday, July 20th, 2012

It’s 10 a.m. Do you know where your grandmother is?

In July, the Bank of Japan released the results of its quarterly tankan survey of business sentiment for April-June. The most notable, and hardly surprising, result was the drop in confidence among major manufacturers. Less was said about the fact that domestic demand and individual consumption appear to be stabilizing. The numbers get even more encouraging when you look at specific industries.

In the tankan, an index of “0″ means no change in sentiment, with minus numbers indicating a loss of confidence and positive numbers a gain in confidence. The index for hotels and restaurants was +3, the first positive rise in five years, and a substantial one. Even more impressive was the index for “individual services,” such as travel agents, a category launched in 2004. The most recent tankan showed an index of +25. These numbers are at once heartening and baffling. Average income did not rise during the same period, which means consumption shouldn’t have risen, so why the increase in confidence?

The report’s authors credit these hopeful signs to people over 60, and smaller businesses’ resourcefulness in tapping this demographic. A recent article in Tokyo Shimbun profiled an izakaya (drinking establishment) chain called Hokkaido, which has an outlet in Kokubunji, Tokyo, that offers a special hiru enkai (daytime party) plan: If each member of a party orders at least ¥3,500 in dishes, then the party can drink as much as they like without paying extra.

Continue reading about senior citizen consumers →

Budget airline determined to give passengers their money’s worth

Monday, June 18th, 2012

As more and more airlines struggle with fluctuating fuel costs, labor disputes and competition that puts downward pressure on fares, they cut wherever they can, and for passengers the clearest sign of this trend is the loss of services once considered standard. It started with charging for drinks and meals on shorter flights, then charging for a second checked bag or even the first. Ireland’s premier budget carrier Ryanair has taken these cost-cutting measures to almost laughable extremes.

Skymark home page

Japanese carriers have always had the highest reputation for service, which is one of the reasons Japanese fliers remained faithful for so long and paid extra for those services. The JAL bankruptcy proved that this was no longer the case, and in recent years Japanese airlines have had to genuinely compete with others for customers, even Japanese customers. Now budget Japanese carriers have softened service, and some think that one of the pioneers, Skymark, has gone too far.

Earlier this month the media covered the airline’s “service concept,” which, in practical terms, doesn’t really make a huge difference in a passenger’s in-flight experience. However, the way it was presented seemed geared to offend. According to the Asahi Shimbun’s reports, the “instructions,” printed on B5-size pieces of paper and inserted in seat pockets on aircraft starting May 18, state that flight attendants are not obligated to “help passengers stow luggage on board the aircraft,” meaning that passengers are totally responsible for their own bags. More to the point, the instructions also state that attendants and other staff do not have to “use the polite language that airlines conventionally use.” And except for the company-issued polo shirts and windbreakers, staff can dress or make up any way they want.

After the media made a big deal of the service concept, Skymark announced that it did not constitute any sort of change but was a “clarification” of policies already in effect. The transportation ministry was mainly concerned with the “tone” of the clarification, which seemed to be a “challenge to” rather than a “violation of” existing regulations. In particular, the ministry was concerned that Skymark’s refusal to “accept complaints” from passengers on matters that “don’t directly affect customers” might cause problems.

Continue reading about budget airlines in Japan →

Play money: Forgotten fate of foreign currency

Monday, June 4th, 2012

Stuff old people bring back from abroad

The magazine Travel Journal recently reported the results of a survey carried out by the Ministry of Internal Affairs among 7,829 travelers after the recent Golden Week holiday. The ministry asked people who had changed yen into foreign currencies how much of that money was left over in cash after they returned to Japan. The average amount of foreign cash remaining among those who responded was the equivalent of ¥38,871. Somehow, the ministry extrapolated this figure to reach the conclusion that, nationwide, there is about ¥1.3 trillion worth of foreign currencies sitting around in people’s dresser drawers or stuck in the back of wardrobes, which is a lot of money.

The survey also found out that the average Japanese traveler going overseas exchanges ¥71,940 on each trip, and spends about 70 percent of that money. The average amount of cash that is stolen from a Japanese robbery victim overseas is ¥65,730 per incident. In 12 percent of the cases, more than ¥100,000 in equivalent cash is stolen from Japanese victims. In 1 percent of these cases the amount is over ¥1 million.

For better or worse, Japanese tourists are famous in foreign countries for carrying a lot of cash, presumably because in Japan merchants still prefer transactions in cash and Japan is a relatively safe country for doing so. It’s one reason why Japanese tourists spend so much in airports. They feel the need to get rid of their foreign cash, even if it’s spent on things they don’t need. Japan Travel also comments that older Japanese people, who tend to travel in tour groups, rarely think about the exchange rate, and especially now with the yen so high may end up exchanging more yen than they really need.

Since this forgotten foreign currency in homes is likely worth less that it was when the exchange was originally made, people may not be so enthusiastic about trading it in for yen, at least not right away. Still, the government must surely be wondering how it can get its hands on it. Travel Journal says the Ministry of Internal Affairs is thinking of launching a “donation” campaign for the money. We can imagine the catch copy: “You can’t spend it here, so why not give it to us?”

How high is up: Tokyo Skytree boosts economy for some

Thursday, May 31st, 2012

There’s a Japanese proverb that goes something like: Smoke and stupidity always rise to the highest places. It’s a useful saying when talking about the media frenzy regarding the Tokyo Skytree, which opened to the public May 22. Though it’s not our mission to ponder the psychology of why people like to go to the top of very tall structures and look down on everyone else, whatever the attraction, it hardly justifies the redundantly blanket media coverage of the new broadcast tower in Tokyo’s Sumida Ward. Of course, the Tobu Railway group, which owns and operates the tower, couldn’t have asked for better publicity. The number of visitors has so far exceeded its own estimates by 50 percent. No one has bothered to calculate the equivalent value in advertising that this free PR represents but it must

Skytree crowds on opening day (Satoko Kawasaki photo)

be in the billions of yen. And it’s paid off. As of last February, group reservations for tickets to the upper observation deck were booked until July 22, amounting to some 300,000 separate admissions. Because a number of people cancel on a daily basis, the operator of the 634-meter tower has decided to sell an additional 1,000 tickets a day to the lower observation deck (350 meters) between June 4 and July 10 at ¥2,500 a pop. The limit for daily admissions is 14,000, but after cancellations the number that have actually shown up is between 12,000 and 13,000. Altogether, 1.4 million
visitors have been in the tower, 85,000 of whom went to the upper observation deck (450 meters), which costs ¥3,500. Reservations must be made with a credit card (only those issued in Japan are acceptable), and there are no refunds. At those prices and those numbers, it should be no problem for Tobu to pay off its massive ¥400 billion construction cost in a matter or years rather than decades.

Tobu isn’t the only party counting on the Skytree to boost its financial situation. Tokyo Shimbun reports that the “economic impact” of the tower should also be felt nationwide to the tune of ¥174.6 billion and in the Tokyo metropolitan area by as much as ¥130 billion. Even more impressive, Sumida Ward expects ¥88 billion, and that’s just in income. Of the eight Tokyo districts where property values rose in 2011, two are in Sumida Ward near the Skytree. However, according to the Mainichi Shimbun there is some talk among Sumida residents of just how much they themselves will benefit in the balance. About 32 million people a year are projected to come to Tokyo Skytree Town and its retail complex Solamachi, which is considerable given that annual admissions to Tokyo Disneyland and Disney Sea total 25 million. But the surrounding area is more residential than commercial and while local merchants are trying to make the most of the tourist windfall, those who simply live there are wondering if the boost is worth all the trouble. How the influx compromises public safety

Bus driver salaries inversely proportional to risk involved

Thursday, May 3rd, 2012

Media crews across the street from Rikuentai offices in Chiba Prefecture

Shortly after he was elected mayor of Osaka earlier this year, Toru Hashimoto announced that one of his first acts in tackling the city’s deficit would be to cut municipal bus driver salaries by as much as 40 percent for a savings of ¥200 billion a year. The city employs 700 drivers whose average age is 50 and average annual pay is ¥7.39 million. Hashimoto wants to bring their salaries down to about the same level that bus drivers of private companies make in the region. According to the land ministry, the average pay of bus drivers in Osaka, whether they work for a private company or a public entity, is ¥4.6 million a year. Since Osaka municipal drivers belong to a union, it’s assumed Hashimoto has his work cut out for him, but likely he’ll make the change he wants gradually, by cutting pay grade increases for newer drivers.

Bus drivers are in the news now because of the accident on the Kanetsu Expressway in which seven passengers died during an overnight charter bus trip from Kanazawa to Tokyo. The driver fell asleep at the wheel and the bus crashed into an overpass wall. Though the driver was arrested for negligence, the accident has brought attention to the stress that long-distance bus drivers contend with every day. Driving a bus, especially in cramped Japan, is a risky occupation since the driver is responsible for passengers’ lives, but salaries don’t necessarily reflect that risk. Municipal bus drivers tend to make the most, but they almost never drive long monotonous distances that can cause drowsiness.

According to a blog that solicits readers about their salaries, municipal drivers and highway route drivers who work for major transportation companies make the most money, around ¥7 million, followed by route bus drivers who work for private companies. They make between ¥5.5 million and ¥6 million, or less depending on the region. The lowest pay is earned by charter tour bus drivers, like the one who had the accident on the Kanetsu. One 50-year-old who posted on the blog said he made ¥4.8 million a year, while a 29-year-old charter driver said he makes only ¥2.4 million.

Continue reading about bus driver salaries →

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