Continental experiencing rebound in Asia By Craig DeSilva For Saipan Tribune

HONOLULU, Hawaii (PIDP/CPIS) — After four years of struggling to survive in the Japanese market due to the Asian economic crisis, Continental Air Micronesia said the airline is slowly experiencing signs of revival in tourism in the region.

Wally Dias, vice president of Continental Air Micronesia, made the comments during his keynote address at the “Eco-Business Opportunities in Micronesia” conference in Honolulu last month.

The two-day workshop, aimed at fostering economic ties between the U.S. and Micronesia, was sponsored by the East-West Center’s Pacific Islands Development Program and the Hawaii State Department of Business Economic Development and Tourism.

In his speech to an audience of more than 100 people, Dias noted that Guam-based Continental Micronesia, a wholly owned subsidiary of Continental Airlines Inc., has been doing business in the Pacific for more than 30 year and is committed to growing in the region.

A majority of the airline’s passengers are from Japan – 42 percent – while the remainder comes mainly from Micronesia and Hawaii.

To illustrate the importance of the Japanese market, Dias noted that 60 percent of Continental Micronesia’s revenues is generated from Japan. About 28 percent is generated from Micronesia.

The Asian economic crisis in the past few years has forced the company to “sit back and rationalize how we did business,” he said.
Part of those changes included shifting flight schedules in the eight Japanese cities Continental Micronesia currently serves in order to maximize the effectiveness of its flights.

Also, the airline rescheduled its east-west traffic in order to connect Guam-Honolulu routes with Continental flights in U.S. mainland cities of Houston, New York and Los Angeles flying to Hawaii. The result: Micronesia has been more accessible to the U.S. tourism market.

“It’s always a tough sell because we’re so far away from the U.S. as far as tourism is concerned,” Dias said. “But it’s made the market much more accessible, and we’ve seen a large increase in our U.S. traffic in Palau with the change.”

Dias said there are positive signs that the Japan market is rebounding.

The Japanese economy has stabilized this year. And travel wholesalers in Japan are reporting increased demand from travelers this year, he said.

Part of the success has been the company’s commitment to spend $4 million for advertising in the Pacific. A majority of the budget is spent on the Japanese market, he said.

Japan Travel Bureau (JTB), one of the largest wholesale travel agencies in Japan, created a Micronesia tourism brochure for the first time. It promotes all the islands of Micronesia. In the past, promotion in Micronesia was focused on Guam and Saipan.

“The outbound Japan travelers is what wags the tail,” Dias said. “It’s been a tough three years. I’ve gotten a lot of gray hairs.”

Dias said despite Japan’s economic problems, the airline has not given up on the market. Japan’s economy still dwarfs that of its Asian neighbors in GDP growth, per capita income, and outbound travelers, he noted.

“When Japan sneezes, the rest of Asia catches a cold,” he said. “So I don’t think it’s a viable solution to diversify away from Japan. We need to concentrate on Japan.”

JTB’s recent forecasts envision a 3 to 4 percent increase in outbound travelers this year over last year, indicating that tourism in Japan is on the rise.

“Although the economy remains weak, people are beginning to be a little more confident,” he said. “It appears good things are on the horizon for Japan.”
However, challenges still loom ahead for the airline.

Continental Micronesia has in the past relied on healthy passenger loads on its Guam-Honolulu route. But those passengers are drying up due to the tourism downturn and exit of military personnel during most of the 1990s.

“That’s why it was important for us to connect the Guam to Honolulu flights with the U.S. mainland flights and Pacific destinations to augment flights with passenger volume flying beyond Micronesia to other destinations,” Dias emphasized.

An increase in fuel costs in the past year has also driven up costs for the airline.
“But things have been much better now compared to the last three years,” Dias added. “And we’re adding more service in the market.”

The airline added an extra flight on its Hong Kong-Guam route last November and plans to add another flight on that route in January 2001.
Flights were also added on the Manila-Guam route.

As a testament to the comeback of Japan, Continental Micronesia increased flights on the Guam-Narita and Guam-Nagoya routes, and will add new flights in Fukuoka and Osaka.

Also, the airline added flights in Seoul, South Korea on July 16 and will be adding a flight to Bali this month.

“We’re making the investment because we’re confident Micronesia will be the place to be in the next 30 years and we want to be involved in it,” Dias said.