Unlike other airlines that target business travelers using metropolises such as Tokyo or Osaka, Continental Airlines Inc. aims to focus on leisure travelers from regional cities, the leader of the airline’s Asian operations said in an interview with The Japan Times.
“We have a vision of creating the ‘hometown carrier concept’ ” to get a preference, Mark Erwin, president of Continental Airline’s Asia-Pacific division, said during a recent visit to Tokyo.
Only a few international carriers serve regional airports in Japan, forcing most overseas-bound travelers to use Narita airport outside Tokyo, Kansai International Airport near Osaka or Central (Chubu) International Airport near Nagoya.
But Continental offers direct flights to islands in the West Pacific, including the popular destination of Guam, from not only Narita and Chubu but also the cities of Sapporo, Sendai, Niigata, Okayama, Hiroshima and Fukuoka.
Erwin said flying directly from regional airports improves customer convenience, pointing out that holidaymakers in Japan can get to Guam in about 3 1/2 hours.
“People go to Guam because the prices are reasonable and (thanks to Guam’s proximity) they can make a long weekend,” he said. “So (Guam) has a lot of advantages over Hawaii and other Southeast Asian destinations.”
Backed by the economic recovery, the number of Japanese who traveled to Guam grew 5 percent in the January-April quarter from a year ago, and Continental is trying to cash in on the rising demand.
The carrier also saw a 6 percent increase in Japan-to-Guam traffic from January to May over the previous year, prompting it to expand flights between Hiroshima and Guam to four a week from two since the end of 2005.
This strategy contrasts with the October withdrawal by ailing Japan Airlines Corp. from Fukuoka-Honolulu and Tokyo-Saipan services because of low profitability.
Operating resort flights from regional cities is less profitable than serving trunk routes where there is steady demand for business flights, but Erwin said such risks can be overcome by taking advantage of its hub airport in Guam and its fleet flexibility.
For example, people who fly to Guam from one of the eight cities served in Japan can also fly to Bali, Palau, Saipan, Cairns and popular Micronesian resorts, he said.
Continental mainly uses 256-seat Boeing 767-400s for the Narita-Guam route and 155-seat Boeing 737-800s for the less-busy routes, including those between the regional cities and Guam.
In addition to the smaller jetliners, the carrier is replacing old aircraft with fuel efficient planes in what Erwin calls “the natural hedge program” against rising fuel prices — the global aviation industry’s greatest concern.
The average age of the carrier’s fleet is 7 1/2 years, compared with more than 10 years at other airlines, the company said.
The surge in fuel costs, however, is something beyond Continental’s control.
“We exhausted all efforts to improve fuel efficiency and (to reduce) costs,” and high fuel prices finally forced the carrier to adjust worker salaries, Erwin said.
Continental has gradually reduced pay and benefits for all workers since mid-2005, achieving a $500 million reduction in costs.
At home, Continental, like many other established carriers, is facing severe competition from cut-rate carriers that emerged after the U.S. industry was deregulated.
Erwin said one way to increase profitability is to become less dependent on the U.S. market and expand international operations.
As part of its international expansion, Continental launched flights from Newark, N.J., to Beijing last June and Newark to Copenhagen and Newark to Barcelona last month.
“Currently, only 57 percent of our available seat miles are in the U.S. domestic system; 43 percent are in the international arena. Continental serves more international destinations than any other U.S. carrier,” he said. “We believe that (is) the key to our success.”
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