Hawaiian Airlines CEO Mark Dunkerley says Japan’s macroeconomic indicators are the worst he’s ever seen for the country.
The population is aging, with 26 percent of the country’s population now older than 65; the reproductive growth rate is a low 1.4 percent; and the Japanese are looking outside their country for investment opportunities.
But that hasn’t dissuaded the state’s largest carrier from investing heavily in Hawaii’s top international tourism market.
Dunkerley said Japan has flipped the switch from decades earlier and become a nation of spenders rather than savers.
“They were net savers and now they’re net spenders, and they have an unbelievable amount of money because they’ve been hard at it for decades,” Dunkerley said Tuesday while giving the keynote address at the Honolulu Japanese Chamber of Commerce Inaugural and Generational Award Luncheon at Hilton Hawaiian Village. “So, what are they spending it on? They’re spending it on travel.”
That has persuaded Hawaiian to bolster its presence in Japan, which it began flying to in November 2010. Hawaiian begins daily service July 22 between Honolulu and Narita International Airport in Tokyo, and last week began selling tickets for its thrice-weekly service between Haneda International Airport in Tokyo and Kona that will begin Dec. 20. Hawaiian also flies between Honolulu and Haneda, Honolulu and Osaka, and Honolulu and Sapporo. Hawaiian previously had routes serving Sendai and Fukuoka but canceled them due to low demand.
“Before long I would anticipate we would be the largest carrier bringing people from Japan to Hawaii, and that’s a huge investment,” Dunkerley said. “Each one of these new routes — in round numbers — is about $90 million of annual operating expense.
“Our ambition in life is to make sure the revenue that we receive is more than $90 million,” he added, getting a chuckle from the hundreds in the audience.
Dunkerley said that to service a daily route in Japan, it costs roughly $140 million to $150 million per airplane, and that the company needs 1.3 or 1.4 airplanes on a route due to rotational needs and maintenance.
“So, we’re $200 million or so into the value of the airplane that we fly one route and $90 million in operating costs,” he said. “That means the level of investment that our company has made in Japan is enormous. It fully represents 20 percent of our capacity that we operate. That’s second only to our North America service.”
Even though Japanese visitors’ daily spending in Hawaii dropped 10 percent in 2015 over 2014 due to the weakened yen, Dunkerley said the number of Japanese visitors to Hawaii has remained consistent, with only a 0.8 percent drop over that same period.
Among other topics Dun- kerley covered after his talk:
>> On the long-running labor negotiations between the company and the pilots, he said, “We’re in part of the mediation process right now, and I think that’s the appropriate place to leave it. We’re waiting to see what the National Mediation Board wants to do as far as the next step.”
>> On whether the U.S. Department of Transportation, which is considering reallocating Haneda routes, will allow Hawaiian to maintain the daily Honolulu-Haneda route it has had since November 2010, he said, “A deadline is going to be early November because that’s when plans have to be in place for the following spring. So, the DOT could rule anytime between now and then.”
