Japanese Outbound Travel Is Hindered by a Weak Yen
It has always been a popular destination for tourists and business travelers worldwide because it is one of Asia’s most technologically advanced nations with distinctive cultures and histories. We will discuss how travel in Japan has changed since it was closed off to international travel for a lengthy period, only opening fully in mid-September.
Inbound travel is at an all-time highWhen designated tour groups were permitted to visit Japan in June, international travel resumed, and global passenger traffic hovered around 20% of pre-pandemic levels by the end of August, with approximately 120,000 travelers. There was a steady increase in visitors to about 205,000 in September, but the improvements were too gradual for Japan’s economy to benefit significantly. Tragically, the devastating effects of the pandemic are still very evident throughout the country, with many regions struggling to recover from economic and physical devastation. However, one recent piece indicates that better days may be coming for Japan. In three weeks after Japan removed all travel restrictions and opened its borders to visa-free visitors, air ticket bookings increased significantly. Airlines also began increasing their flight frequency, transporting more inbound visitors to this once struggling country. And while still below pre-pandemic levels, October was when visitor levels noticeably grew as opposed to September when only 205,000 arrived. The easing of restrictions did help Japan get 30% more inbound tourists than before. When the end of the year approaches, the numbers will rise again because of how the demand for goods and services is being stimulated by low exchange rates. Visitors from countries with strong currencies, especially Americans, will find that traveling to Japan becomes relatively cheaper as the weakened Yen depreciates by nearly 20% this year. The weak Yen means that more Western-based visitors will be drawn to Tokyo which could keep China’s tourists from making any visits at all.
Outbound and domestic travel outlook dampenedAs a result of the weakening Yen, it is only suitable for inbound travel to Japan; outbound travel is not suitable because it is too expensive for locals. Air tickets from abroad to Japan have skyrocketed, whereas air tickets from Japan to a foreign country have remained at 20% of pre-pandemic levels despite demand skyrocketing. Domestic travel is also affected by the weakening Yen, since flights between Japan’s cities are becoming more expensive. The lack of outbound demand can still be compensated by an increase in inbound demand for major carriers such as Japan Airlines, All Nippon Airways, Peach Aviation, and ZIPAir Tokyo. However, not all Japanese carriers have the same luck, especially domestic carriers like Air Do, Skymark Airlines, and Spring Japan, to name a few. In the absence of domestic demand, Japanese travelers have been slow in recovering from the pandemic. Unless the Yen starts appreciating, Japanese travelers are unlikely to go abroad anytime soon, so the numbers of outbound travelers are unlikely to change anytime soon. But what about domestic travel?
A discount program is used to subsidizeThrough next year, the Japanese Government plans to implement a domestic travel subsidy program that will boost domestic tourism and make air travel more affordable for Japanese travelers. Currently, the Government provides up to 11,000 Yen ($79) per night per person for seven days under its National Travel Discount Program. It includes coupons for shopping and meals, as well as tickets for public transport and domestic air travel. From 2023, the maximum subsidy is likely to be lowered to around 7,000 Yen ($50.50) per night for seven days. Although the amount will likely be lower, it still offers hope for the Japanese domestic carriers to recover more steadily.