Japan's Reward Point Market To Exceed Y1tln In FY09

TOKYO (Nikkei)--More than 1 trillion yen worth of shopping points will likely be issued in Japan in the current year through March 2010, with more businesses offering rewards programs for a wider range of products and services.

A reward point card from Yodobashi Camera Co. With more products and services purchasable via reward points, these plastic cards are now as good as cash at many stores and online.

According to Nomura Research Institute estimates, nearly 790 billion yen of points were electronically issued at a minimum in fiscal 2008 by stores, credit card companies, airlines and others. The estimated total reaches roughly 820 billion yen with the addition of point rewards issued by Culture Convenience Club Co. group rental DVD and CD stores, as well as virtual malls run by Rakuten Inc. and Yahoo Japan Corp.

With the government earmarking roughly 290 billion yen for its eco-point economic stimulus measure, the total for fiscal 2009 is expected to exceed 1 trillion yen -- equivalent to about 1.5% of the 72.2 trillion yen in cash in circulation as of June.

Aiming to leverage the popularity of point programs and fence in customers, some companies have tied up with others and made their points more useful.

For example, Yamada Denki Co., a major consumer electronics discount store chain operator, has created a virtual mall by joining forces with Takashimaya Co., Ryohin Keikaku Co., and 220 or so other firms. Shoppers at the virtual mall receive points from both Yamada and the virtual store operators from which they make their purchases.

Yamada has also tied up with All Nippon Airways Co. and other firms to allow one company's points to be exchanged for points from another.

Bic Camera Inc., a major rival of Yamada, lets its points be converted into East Japan Railway Co.'s Suica e-cash.

Yahoo Japan points are expected to become exchangeable for Seven & i Holdings Co.'s nanaco electronic money this autumn.

(The Nikkei July 30 morning edition)

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Canada wants to keep Emirates out of the Canadian market

As federal cabinet ministers boast about opening Canadian skies to foreign airlines, transport officials have been quietly undermining plans by one of the world's biggest airlines to expand service to Toronto, documents obtained by the Star show.

In private briefings, Transport Canada officials have gone on the offensive against Emirates Airlines' request for greater access to the Canadian market, charging that the Middle Eastern carrier is "an instrument of government policy" and is heavily subsidized by the public purse.

They also suggest Transport Canada should shelter Canadian carriers from competition.

The federal government's response to Emirates' request has sparked a sharp rebuke from a senior airline executive, who accuses Transport Canada officials of making "slanderous" allegations.

In a letter to the department, Emirates Senior Vice-President Andrew Parker claims that despite the promise of extra tourism, new jobs and other economic benefits, Transport Canada wants to keep Emirates – a global carrier serving 60 countries – out of the Canadian market.

"The language Transport Canada has used over the past decade is aggressive, often biased and deeply objectionable to this carrier," Parker writes in the letter obtained by the Star.

"The real aim of these rejections is sadly to keep Emirates permanently away from Canada. ... Emirates will not be deterred," Parker writes.

The spat offers a window into the world of international air treaties, where visions of a global economy often clash with deep-seated sentiments of protectionism, national self-interest and economics.

Senior Canadian cabinet ministers have pushed for closer ties to the United Arab Emirates. That suggests the resistance to Emirates' bid to fly more often to Canada lies within the federal bureaucracy.

At the heart of the growing dispute is a request from Emirates Airlines to increase flights between Dubai and Toronto, as well as start service to Calgary and Vancouver.

The request has won broad support among municipal and provincial governments, who say the extra flights would mean more tourism, new investment and more jobs. It's estimated allowing Emirates and another UAE airline, Etihad Airways, to boost flights into Pearson alone would produce more than 500 jobs, $20 million in salaries and $13.5 million in tax revenues.

However, Transport Canada insists the current cap of six flights a week from the United Arab Emirates to Canada – split between Emirates and Etihad – is enough to serve the market.

But in a presentation obtained by the Star, titled "Blue Sky, Canada's International Air Policy," given to stakeholders this spring, senior Transport Canada officials voiced other reasons for not moving on Emirates' request, including:

"Emirates and Etihad are instruments of government policy. ... The governments are helping finance massive wide-body aircraft orders and massive expansion of airport infrastructure."
They say the market between Canada and UAE is small, suggesting it's not worth the attention.
It cites an independent study that says the public-financed expansion of aviation in the Persian Gulf will lead to "unhealthy competition and irrational commercial behaviour."
It suggests Canadian carriers need to be protected. "In international aviation, as in other strategic areas, countries are very much driven by self-interest. Canada forgets this rule at its peril," the briefing paper says. "Our sky is open, at least as open as can be given ... our national interest."
But in a six-page rebuttal to Brigita Gravitis-Beck, Transport Canada's director-general of air policy, Parker says the government allegations are ill-informed and "strongly in error."

"We are particularly offended at the suggestion – without any substantive foundation – that Emirates receives government support for aircraft purchases. We receive no subsidies or government support," Parker writes.

While Emirates is state-owned, Parker says the airline operates on a fully commercial footing with no public subsidies.

And he charges that federal bureaucrats are deliberately trying to shelter Air Canada from competition, though it doesn't fly to the UAE.

"Unlike Air Canada, Emirates does not enjoy any aero-political protection – the greatest form of subsidy," he writes.

Parker also ridicules the government claim that the existing market is insignificant, saying the true potential of the Canada-Dubai route cannot be realized because Ottawa has restricted the flights.

He says Ottawa's hard-line attitude has not changed in the last decade, despite "extraordinary" trade growth between the two nations.

"We do hope that Transport Canada will adopt a more balanced and accurate view on Emirates.

"Transport officials said yesterday they were unable to comment on the dispute or their own allegations involving Emirates.

Source: The Star

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ANA, JAL Eyeing Return Of Fuel Surcharges On Higher Oil Prices

TOKYO (Nikkei)--All Nippon Airways Co. and Japan Airlines Corp. will likely bring back fuel surcharges in October to reflect higher oil prices.

ANA and JAL reassess such surcharges every three months. Owing to a downslide in crude oil prices from last summer, the airlines sharply reduced their surcharges this past January and April. And they eliminated such charges altogether from July.

The October-December surcharges will be based on the average price of jet fuel during the May-July period. As of July 14, the average price of kerosene in the Singapore market, a benchmark for jet fuel prices, stood at 70.7 dollars a barrel, above the 60 dollar threshold at which the surcharge kicks in. As a result, the airlines are likely to bring back the surcharge to help soften the brunt of their rising costs.

"We are currently exploring the possibility of charging (the fees) from October," ANA President Shinichiro Ito said at a news conference Wednesday.

JAL is also said to be considering a similar move.

Previously, the airlines had charged 7,000 yen to 14,000 yen on round-trip tickets for flights connecting Japan with Europe and the U.S. and 1,000 yen to 3,000 yen for Chinese routes. ANA, however, is unsure about whether to charge the same fees again.

"Because the elimination of surcharges helped fuel travel demand, we are still giving it thought," said Ito, suggesting that the airline might implement a different fee structure.

(The Nikkei July 23 morning edition)

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Itochu To Acquire JAL's Human Resources Units

TOKYO (Nikkei)--Itochu Corp. will bring two personnel services subsidiaries of Japan Airlines Corp. under its umbrella by October, shifting into high gear the trading house's drive to strengthen its human resources business, The Nikkei learned Thursday.

The deal will also enable the struggling JAL to move ahead with planned withdrawals from noncore operations in its restructuring efforts closely monitored by the government.

Caplan Corp., a staffing firm 78%-owned by Itochu, will absorb JAL Business Co., which sends temporary workers to JAL group firms and other companies in the travel industry, and JAL Academy Co., a provider of employee-training services. Itochu will take a majority stake in the new company to be created through this three-way merger. JAL will keep its interest in the combined firm to around 30%, making an effective exit from the human resources business.

Since Caplan specializes in placing administrative personnel and JAL Business focuses on customer service and reception staff, Itochu believes that the merger will have a strong positive impact. The two JAL units have combined sales of 23 billion yen, so the merger will lift Caplan -- which raked in 12.7 billion yen in sales last fiscal year -- to 12th place or so from around 20th in the staffing industry. Itochu plans to continue acquiring subsidiaries of major corporations to make further inroads into the 6 trillion yen human resources business.

In exchange for a 100 billion yen syndicated loan partly guaranteed by the government, JAL is to restructure under state oversight. By giving up the two staffing units, the carrier will shed some 1,300 jobs.

(The Nikkei July 17 morning edition)

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3 Travel Agencies Cut Overseas Tour Prices 15-20% For Oct-March

TOKYO (Nikkei)--JTB Corp., Nippon Travel Agency Co. and Jalpak Co. on Thursday each unveiled overseas tour packages that cost on average 15-20% less than a year ago thanks to the strong yen and reduced fuel surcharges.

Beginning Friday, JTB will gradually launch its package tours for departure between October and March, with prices down an average of 15-20%. It aims to tap demand among those passing up overseas trips this summer because of such factors as the economic downturn and the A/H1N1 influenza virus. As a result, the agency is targeting a 10% rise in sales to 750,000 travelers.

For the first time, JTB has put together a tour to Saudi Arabia that will take in such sights as the World Heritage-listed archaeological site of Madain Salih. It will cost between 579,000 yen and 699,000 yen. With few Japanese tourists visiting Saudi Arabia, JTB will home in on well-traveled seniors.

Nippon Travel lowered the price of packages to all destinations by 18% on average. It has 15 tours based on environmental themes. For instance, a seven-day trip to Iceland will include a tour of a geothermal-powered plant.

Meanwhile, Jalpak has cut the prices of its tours to all parts of the world by an average of 20%. It boasts a strong lineup for the upwardly mobile and will also begin selling tours to Los Angeles and Chicago that will include premium economy-class seats on flights by parent Japan Airlines Corp.

(The Nikkei July 17 morning edition)

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INTERVIEW: Economic Reality Reflected In Railroad Business

TOKYO (Nikkei)--Demand for railroads is likely to recover gradually toward the end of the year, said Satoshi Seino, president of East Japan Railway Co., or JR East, said in an interview with The Nikkei.

The Nikkei asked Seino, 61, about the economic reality as seen from the viewpoint of a railroad operator. Excerpts of the interview follow.

Q: The government has declared that the economy has bottomed out. If that is true, then the movements of people will become more active. Do you feel such changes?

A: (The performance of) railroads is an indicator that lags behind the general economic performance and we still cannot feel the economy bottoming out.

The financial crisis occurred in September last year, and operating revenue in our railroad business started to decline year on year in November. We have been experiencing unprecedented declines and the operating revenue in May this year declined 8.9% year on year.

Satoshi Seino, president of East Japan Railway

Q: What part of your railroad business is hit hardest?

A: Our revenue from train passes and business performance of short-distance lines such as the Yamanote line (a loop line in Tokyo) are solid. Meanwhile, our businesses in mid-distance travel, which are taken by many business people, are struggling.

For instance, sales of discount tickets for "shinkansen" bullet trains between Tokyo and Utsunomiya stations and Tokyo and Oyama stations have declined 20%. It appears that (firms in) the auto industry, which are clustered in the northern Kanto area, have been cutting the number of business trips as part of their cost reduction efforts.

Q: How did reductions in highway tolls and cases of new influenza influence your business?

A: It seems that the impact of the influenza has died down. School trips were suspended one after the other around the holidays (in early May) but I expect these school trips to return.

The impact of the reductions in highway tolls was quite large. Railroad operators are now forced to engage in price competition with cars owned by individuals. To respond to the reductions in highway tolls, we have in June started marketing a package which combines discount railroad tickets and 2,000 yen-a-day car rental. We would like our customers to take a train to a nearby station and then rent a car to visit points beyond. We also want to appeal that, by using train, one does not have to get stuck in a traffic jam and also can make environmental contributions.

In addition, the upcoming general elections will be a negative factor for our business because the movement of people will inevitably slow down during the election campaigns.

Q: What is your forecast for the summer holiday season that is about to start?

A: For the major holiday season in early May, we had harsh results even though we had felt solid responses when we were accepting reservations. It is difficult to predict sales of free-seating tickets sold on the day of travel, and it is also difficult to predict at this moment what the business will be like during the summer vacation.

In any case, we have to market attractive products and stimulate demand. We have to think hard to find ways to arouse desire (among potential customers) to visit places.

Q: What is your assessment for the solid performance of Lumine Co., a subsidiary of JR East that operates commercial buildings, even during the sluggish economy?

A: Lumine lined up attractive tenants and gained support from women in their 20s and 30s who tend to have more money that they can spend freely than other groups of people and they tend to be less affected in the decline of economy. Nonetheless, sales of Lumine started to decline on a year-on-year basis starting around April. These declines have not been as harsh as those experienced by department stores, but we have been feeling the impact of the deteriorating economy steadily.

Similarly, we have been facing difficulties in selling spaces to place advertisement at stations and to hung advertisements in commuter trains.

It is necessary to stimulate demand in this area as well. For instance, we are considering to use electronic displays in place for hanging advertisements in commuter trains so that we, for instance, would be able to display ads for coffee in the morning and ones for beer at nights.

Q: Are you saying that the overall situation is rather bleak?

A: Because of the severity of the current crisis, it will be difficult to see a V-shaped recovery and the recovery is likely to be U-shaped. The issue is how long the bottom part of the U will last. We have started hearing positive news such as inventories adjustments being over in the manufacturing sector, and I expect demand for railroad will recover gradually toward the end of this year.

--Interviewed by senior Nikkei staff writer Kunio Saijo.

(The Nikkei July 14 morning edition)

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Casio To Stop Flying Goods From China To Cut Emissions

TOKYO (Nikkei)--Casio Computer Co. will by next spring stop using airplanes to transport most finished products from its Chinese factory to Japan, in a bid to reduce carbon dioxide emissions more than 20-fold, company sources said.

Casio currently sends electronic dictionaries, digital cameras and other goods from a plant in Zhongshan, Guangdong Province, by air to a distribution center in Suzuka, Mie Prefecture. Now, these products will be shipped via train and boat instead.

The firm recently began using the new system to ship electronic keyboards on a trial basis. The cargo is sent by rail from Shenzhen to Shanghai, and then by boat to Hakata in Kyushu, Japan's southernmost main island.

Casio emits 440 metric tons of CO2 for every 100 tons of cargo it flies from the Zhongshan factory to Japan. By using the train-boat combination, emissions will be slashed to 20 tons. Furthermore, shipping costs will fall by more than 20%.

The company is using trucks to transport the keyboards from Hakata to the Suzuka distribution center for the time being, but it will consider shipping them by rail to further reduce emissions.

It takes seven days to transport the cargo by rail and sea, compared with three days by air. For this reason, Casio will continue using airplanes to process rush orders.

As major Japanese manufacturers increase their overseas production, their distribution-related CO2 emissions are increasing steadily. Against this backdrop, firms are expected to step up efforts to reduce such emissions.

(The Nikkei July 13 evening edition)

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JAL To Request 30% Rise In International Cargo Charges

TOKYO (Nikkei)--Japan Airlines Corp. will seek a 30% jump in international freight rates from the middle of this month as part of drastic measures to bolster such operations.

The struggling airline last implemented a full-scale cargo hike roughly a year ago. This latest increase comes on the back of rebounding demand for shipments of LCD-panel-related parts to Shanghai and Taiwan and deliveries of autoparts to Guangzhou, China.

On its North American routes, JAL currently requests 230-510 yen per kilogram, while European shipments are charged 420-540 yen per kilogram. Compared with last fall, charges are down 30-50% because of the economic malaise. Despite shipments of air cargo from Japan plunging 54% on the year in the January-March quarter, the decline has somewhat steadied to 40% since April.

Bracing for defections among customers rejecting the hikes, JAL is prepared to negotiate. But there is likely to be a strong backlash from forwarders.

"Cargo owners are still demanding lower prices," says a leading forwarder.

Amid drawn-out economic woes, companies are stepping up efforts to slash freight expenses. So, if the recovery in shipments does not continue, the price hikes will face obstacles. And for agricultural machinery, semiconductor-manufacturing devices and other products for which there is little demand for urgent shipments, customers are shifting to marine transport as they focus on lower costs.

JAL is also considering further cuts to freight flights. Its North American service consists of five return trips a week between Narita and Chicago and four between Narita and Los Angeles. It will keep one Narita-Chicago service and switch the remainder to four flights a week on a Narita-Chicago-Los Angeles-Narita route, reducing freight capacity 10%.

In Europe, JAL suspended the Narita-Amsterdam-Frankfurt-Narita service in March. It also stopped code-share freight flights with Air France, halving its freight capacity. And for Asia, it is switching from large to midsize aircraft for Narita-Singapore-Bangkok-Narita flights.

Of JAL's 1.95 trillion yen in group sales for fiscal 2008, international freight operations generated just 152.1 billion yen, or less than 10%. But around 40% of its operating loss of 50.8 billion yen is attributed to the cargo services.

(The Nikkei July 3 morning edition)

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Nippon Yusen Air Transport Unit Cancels Expansion Plan

TOKYO (Nikkei)--Nippon Yusen KK has halted plans to expand its air transport operations due to slumping demand amid the economic downturn, company sources said Tuesday.

Subsidiary Nippon Cargo Airlines Co. (NCA) had intended to expand its fleet of eight cargo planes to 24 by 2013, which would have made it the nation's largest air transport company. NCA will maintain the current fleet size for the foreseeable future.

Nonetheless, the company has not canceled its order for 14 "747-8F" large cargo planes being developed by Boeing Co. of the U.S. It plans to lease out existing planes as they are replaced by new aircraft.

NCA posted a pretax loss of 18.8 billion yen for the year through March 2009 and forecasts a 20 billion yen loss for the current term.

(The Nikkei June 23 evening edition)

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Expansion Of Intl Flights Seen As Y980bn Boon To Economy

TOKYO (Nikkei)--The increased number of international flights that will become possible starting in fiscal 2011 at Narita and Haneda airports is expected to have an economic ripple effect of 980.4 billion yen a year, according to a calculation released Friday by the Ministry of Land, Infrastructure, Transport and Tourism.

Through the expansion of existing runways and the construction of new ones, more international routes will be able to fly into and out of both New Tokyo International Airport at Narita and Tokyo International Airport at Haneda. Compared with fiscal 2007, Narita is expected to handle 20,000 more flights a year in fiscal 2011, and Haneda 50,000 more.

The ministry estimates that this will result in 2.19 million more foreigners visiting Japan each year and 3.87 million more Japanese flying overseas. It calculates that this increased traffic will produce 410 billion yen in increased consumer spending. The figure includes increased spending of 110 billion yen for accommodations, 100 billion yen for airport travel, and 60 billion yen for restaurants.

(The Nikkei June 13 morning edition)

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Canadian restrictions on Emirates “complete and utter nonsense”

Following the restrictions imposed on Emirates flights to Canada, the carrier’s president has lashed out saying its “complete and utter nonsense”. Reuters reported that Canada placed restrictions on Emirates earlier this week, limiting it to only three weekly flights to the whole country. The restrictions were fuelled by the Air Canada Pilots Association who believed if Ottawa allowed Emirates to expand in Canada, Air Canada would be forced into bankruptcy and its airline partners would be hurt. “The notion that a few extra flights a week to a destination that the national carrier doesn’t even choose to serve will have any type of impact on their bottom line is clearly ludicrous,” said Emirates President Tim Clark on Wednesday at the Economic Club of Canada Clark told The Globe and Mail that Emirates was a fair competitor against Air Canada and its partners, adding that the flights would help boost tourism and trade to the country. "Opportunities are being missed simply because the transport options are not there” With hopes to introduce services to Calgary and Vancouver, Clark urged Ottawa to approve Emirates Toronto-Dubai flights to more than three weekly flights. On the other side of the argument, Air Canada spokesman Peter Fitzpatrick said the direct flights would not provide mutual benefits as Canada did not receive much traffic from Dubai and Canadians often just used Dubai as a stopover destination. “Air Canada has always said it supports liberalization and open skies agreements with the provision that they create a level playing field and make sense for Canada” said Fitzpatrick. “There is no reciprocal benefit to Canadian carriers or Canada. There has to be advantages for both countries.”

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Number of travelers at Narita dips 2% during Golden Week

NARITA — The number of travelers passing through Narita airport during Japan’s Golden Week holiday season from April 24 to May 7 came to about 921,500, down by some 20,000, or 2.1%, from a year earlier, the immigration authority said Monday.

While the number of Japanese travelers rose 1.7% to 639,900, that of foreign travelers arriving at and departing from the airport during the period fell 9.8% to 281,600, according to the local branch of the Tokyo Regional Immigration Bureau. JTB Corp said Japanese travelers were not greatly influenced with the spread of the new influenza as the reports on the disease became rampant shortly before the holiday season, leading only a small number of people to cancel trips.

© 2009 Kyodo News. All rights reserved.

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