It’s wait-and-see for other airlines

Airline companies are closely monitoring market developments in the travel industry amid the reported plan by Japan Airlines to pull out all of its 14 weekly flights between Saipan and the destination’s premier tourist market, Japan.

Gov. Juan N. Babauta also said the government would meet with airline companies to woo them to fill in the vacuum that would be left by JAL if it proceeds to pull out services to Saipan.

“We have began initial talks with other airlines like Northwest Airlines and others in hope that we can interest them in filling the vacuum that JAL [may create],” Babauta said. “Right now, it looks very promising. NWA is doing a route analysis. It looks like they’re interested in what they see and we’ll go from there.”

Marianas Visitors Authority board members and officials are putting up a team that would fly to Japan and meet with JAL officials and tour agents, the governor said. Additionally, Babauta said the team would also meet with other airline companies in Japan.

Continental Micronesia made no direct comment on JAL’s possible pullout from Saipan since the latter has yet to make an official announcement of its plan.

But Continental vice president for marketing and sales Wally Dias said, “We’re always looking at market opportunities, depending on what’s happening in the market place.”

“If we see an increase in demand at a reasonable fare, we will look at the opportunity,” Dias added.

He noted that rising fuel prices have been pushing up airlines’ operating costs. In January 2004, he said the average jet fuel price was only 89 cents a gallon; this month, the average price reached about $1.80 a gallon.

The fuel price increase translates to millions of dollars in increased operational costs for most airline companies, Dias said. Commonwealth Ports Authority executive director Carlos Salas earlier said that increasing fuel costs resulted in JAL’s plan to pull out from Saipan—or reduce its flights—although the flights bring in the bulk of Japanese tourists.

“Fuel prices have doubled over the last year-and-a-half. Costs are increasing while fares are dropping. You just can’t look at load factors because if the fares are too low and the costs are too high, the load factor won’t matter,” Dias said.

Although Continental does not currently have direct flights between Saipan and Japan, it has about 56 weekly flights between Japan and Guam. Continental services eight cities in Japan, including Tokyo, Nagoya, Fukuoka, Sendai, Sapporo, Niigata, Hiroshima, and Okayama. Continental and its partner, Cape Air, provide seven flights daily between Guam and Saipan.

Although JAL has issued no official statement to local media about pulling out or reducing the number of its flights, an article in the Japanese magazine Wing Travel reported that the airline company would totally suspend flights to Saipan by October.

“To offset the suspension of service on Narita-Saipan, JAL Group is likely to operate charter flights on Haneda-Saipan occasionally to meet demand in the Tokyo Metropolitan area. But, it seems to be difficult to become an entire substitute for the suspension of scheduled services,” the article said.

“Japanese tourists traveling to Northern Mariana (Saipan, Rota and Tinian) totaled 382,000 in 2004, 17 percent more than in 2003. [MVA] sets a goal of 450,000 Japanese tourists for 2005. It seems difficult to achieve the goal, if JAL suspends a service in October,” it added.