Wed, Jan 02, 2013 - Page 14 News List

Airlines hope weak yen will boost travel

STRONG WEAKNESS:Local carriers are appreciating the depreciation of the Japanese currency, which they say will offset the slump in travel to Japan caused by economic woes

Staff writer, with CNA

Taipei-based carriers are optimistic about a surge in travel by Taiwanese to Japan due to the depreciation of the Japanese yen, despite fallout from the sagging domestic economy.

China Airlines Ltd (CAL, 中華航空), the nation’s largest carrier, on Monday said that Japanese Prime Minister Shinzo Abe’s policy of driving down the value of the yen is expected to benefit local airlines operating flights to Japan this year.

According to CAL’s statistics, seats on round-trip flights from Taiwan to Japan on New Year’s Day and over the Lunar New Year holiday — from Feb. 10 to Feb. 17 — are already between 90 percent and 95 percent booked.

Japan has long been a favored tourists destination for Taiwanese and as a result, local airlines see Japan-bound flights as being very lucrative.

However, CAL officials said the sluggish economy has taken a toll on Taiwanese tourism to Japan, citing as an example the downturn in bookings for flights to Japan during non-holiday periods ahead of the Lunar New Year compared with the same period last year.

They ascribed this to Taiwan’s dull economy and smaller year-end bonuses for most workers, which has led many to refrain from taking overseas vacations.

However, the airline officials foreceast that since the cheaper yen will make it more affordable for Taiwanese to travel to Japan, ticket sales to the country are likely to increase.

On average, Taiwanese make between 1.3 million and 1.4 million visits to Japan each year, exceeding Japanese tourist arrivals to Taiwan, which are slightly more than 1 million per year.

TransAsia Airways Corp (復興航空), the nation’s third-largest carrier, also predicted further growth in the number of Taiwanese tourists in Japan thanks to the cheaper yen.

More than 90 percent of the seats on the airline’s fights to Hokkaido, one of the most popular Japanese tourist destinations for Taiwanese, for this month and next month have been booked, TransAsia officials said.

However, the yen’s depreciation against other currencies may have negative long-term repercussions too, such as pulling Japanese businesses from Taiwan back home, and could hurt Taiwan’s role as Japan’s gateway to the Chinese market, analysts said.

Yuanta-Polaris Research Institute (元大寶華研究院) president Liang Kuo-yuan (梁國源) said that according to market estimates, when the US dollar trades above ¥90 for an extended period, overseas Japanese businesses are inclined to return home because of lower capital costs, which would hurt Taiwan’s efforts to further its economic cooperation with Japan.

The US dollar traded above ¥86 on Monday in Asia trading.

For the whole of last year, the Japanese currency closed out its biggest annual decline in seven years after reaching a post-war high in 2011 that eroded the competitiveness of Japanese exporters.

Liang said the yen’s depreciation needs to last for a long time before it will lure overseas Japanese businesses home. Otherwise, they will stay put, even if the US dollar trades above ¥100.

Gordon Sun (孫明德), the director of the Taiwan Institute of Economic Research’s (台灣經濟研究院) macroeconomic forecasting center, said the weakening yen affects each industry differently.

For example, Taiwan’s petrochemical, rubber, metal and mechanical industries might be adversely affected by the weakening yen because of heightened competition from Japan.

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