Lower fares could turn the Japanese tourist boom into a 'silver' bonanza

Friday 26th January 2001

BACKPACKER: But the real market for Japanese tourists is the pensioner class

By Graeme Hunt

The most visible link between Japan and New Zealand can be found in Christchurch where hip Japanese newly-weds hold hands in Hagley Park or punt down the Avon.

It is an image long cultivated by tour promoters - some 65,000 Japanese couples hold their weddings abroad - but hardly representative of the true tourism relationship between Japan and New Zealand.

Of the 150,000 Japanese tourists who came to New Zealand last year, about 40% were in the "silver" market - elderly package tourists. Only about 15% were wedding and honeymoon couples.

Given the Japanese addiction to good health, the silver market will get older with the 60- to 70-year-olds likely to be replaced by 70- to 80-year-olds and eventually centenarians.

Whether young or old, the Japanese are big spenders in New Zealand: $5034 a person for the September 2000 year compared with $3673 a head for Germans, $3665 for Americans, $2720 for Singaporeans and $1784 for Australians.

The only spenders who come within cooee of the Japanese are the South Koreans whose per-visit spend in New Zealand is $3491.

But the Japanese - big spending and tied to package tours as they are - are not stupid. New Zealand is an expensive - perhaps the most expensive - foreign market and Air New Zealand wants to keep it that way.

A shortage of seats and extortionate fares in high season - a return Tokyo-Auckland ticket between November and March can cost more than $6000 - have led to some market resistance among Japanese and considerable grumbling from expatriate Kiwis.

They complain a return airfare to New Zealand can be more than double that to Europe or the US and accuse Air New Zealand of milking a restricted market.

The national carrier denies it is exploiting its market dominance but makes no apology for ticket prices or the costs Japanese tourists face when they travel around New Zealand.

"We are selling New Zealand as a premium market," Air New Zealand corporate affairs manager Alastair Carthew says. "We market it as a niche high-value destination which we call a 'unique personal experience'."

There is little doubt that clean, green New Zealand is highly attractive to environmentally conscious Japanese, especially the growing breed of independent travellers, but since the 1997-98 financial crisis they have been counting their yen carefully.

Tourism New Zealand is reluctant to criticise Air New Zealand publicly, given the money the national carrier spends promoting New Zealand in Japan, but privately senior staffers feel the airline is taking Japanese travellers to the cleaners.

The Japanese market is worth $455 million directly to Air New Zealand and a further $A200 million when Ansett Australia revenue is taken into account. And the airline's manager for international markets, Geoff Burns, said last week Air New Zealand could be a bigger player in Japan.

From April it will be (slightly), with an increase in capacity that should keep some of the critics at bay. It will run five Jumbo B747-400s a week out of Narita, near Tokyo, all year round, lifting capacity 400 seats a week.

From Osaka it presently runs seven B767-300s in high season (November-March) and from April 1 six B767-300s in low season (an increase of one a week). Travellers also have the choice of flying Air New Zealand to Sydney and taking a daily flight, all year round on Ansett Australia to Osaka.

For travellers wanting to visit Nagoya there are three direct flights a week from New Zealand (B767-300s) all year round.

The new capacity should help ease demand - the airline's current loading is a staggering 70% - if not the drain on passengers' wallets. But it should not be forgotten total seat capacity on direct services between Japan and New Zealand has fallen nearly a third since 1996.

Most critics of Air New Zealand say the long-term solution is competition because Air New Zealand has had the market to itself (through a 40% codeshare with Japan Airlines) since JAL stopped flying its own aircraft to New Zealand in 1997.

Tourism New Zealand runs a slick operation in Japan but on a small budget. Its main thrust is the 100% Pure New Zealand campaign which Air New Zealand subsidises.

Tourism New Zealand is able to leverage its marketing in Japan with a comprehensive visiting media programme to New Zealand that gives New Zealand considerable exposure in Japanese newspapers, magazines and on TV. This also helps promote special-interest tourism - tramping, gardening, fishing, snowboarding, skiing, marathon running, farmstays, eco-tourism and rugby - itself part of the 100% Pure campaign.

Tourism New Zealand chief executive George Hickton says growth in the number of Japanese tourists visiting New Zealand has slowly recovered after the 1997-98 financial crisis kept Japanese tourists at home but airfares and seat capacity are issues that need to be addressed.

"New Zealand is generally the most expensive destination people can go to. That is because of the airline capacity on the route."

It should not be forgotten that offshore tourism is relatively new to the Japanese.

Few travelled abroad in the 1950s and until the early 1960s only about 200,000 tourists a year ventured outside Japan, in part because of foreign exchange controls. That changed slowly in the 1970s and dramatically in the 1980s. By the mid-1990s 16 million Japanese were travelling abroad.

The growth of New Zealand as a Japanese destination followed a similar pattern. In 1972 fewer than 6000 tourists visited. The number had tripled by 1980 and exceeded 66,000 in 1987. The record was 1996 when arrivals exceeded 160,000 - 10,000 more than in 2000.

The market is now worth $750 million a year and Tourism New Zealand predicts arrival growth of 3-5% a year in the next three years.

That sounds overoptimistic given Japan's likely GDP growth but even at, say, 1.5% the Japanese market would remain lucrative for New Zealand hoteliers and tour operators. Regrettably air services between Japan and New Zealand, the hangover of a conservative air services agreement entered into in 1980, have lagged behind.

Relatively few Kiwis tourists visit Japan; it is not a top-of-mind destination and it is certainly among the most expensive, especially so with the fall in the kiwi.

Those who pluck up the courage to visit, however, are rarely disappointed. They find Japan a safe destination - one of the world's safest - and the locals courteous and friendly.

Tourists also find young Japanese have a growing knowledge of New Zealand - in part due to school, cultural and sporting exchanges over the past 20 years.

New Zealand rugby has an especially high profile in Japanese university and corporate life; Japan is perhaps the only rugby-playing nation to rate the All Blacks as world champions.

Graeme Hunt, editor-at-large, was sponsored on a visit to Japan by the New Zealand Ministry of Foreign Affairs and Trade. He presented a speech on Japan-New Zealand relations to a New Zealand studies colloquium in Tokyo

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