www.debito.org
THE TOKEN PANELIST ON JAPANESE TV
ON JAPANESE AIRLINE DEREGULATION
I was on a Japanese TV program recently talking about a subject I knew next to nothing about. It's an interesting story on several levels, and so I was really in a bind on how to present this topic as a Web html. There are several important themes--the information itself ("American-style" deregulation in Japan), how I got the information (by asking cyberspace really nicely and then organizing the deluge), and how I gave it (as a token American TV panelist charged with giving the "American side", balancing minimal time with a personal need to get the truth out). To leave anything out would lose valuable context, so be advised that this URL does not limit itself to blah talk about airlines in Japan and America. It gets into the adventure of both electronic and broadcast media.
It all started with an email to Fukuzawa, ISSHO, and Friends Wed, 5 Mar 1997:
Fellow Fukuzawans:
A POLITE REQUEST FOR INFORMATION RE THE AIRLINE INDUSTRY:
I have been asked today by the Hokkaido Broadcasting Corporation to appear on one of their TV talk shows. Guess what the topic is? No, not about "my impressions of being a gaijin in Japan". About deregulation of the airline industry and what it will mean for the world's most profitable air corridor--the Sapporo-Tokyo one.
Say what? I have to admit that despite being a token gaijin (The other panelists are prestigious university professors and big businessmen, and what the hell am I? A JAFET--Just Another English Teacher!), I'm pleased I'm not going to be jumping through hoops and smiling through inanities. But I'm sweating bricks over my ignorance of the subject. I only just heard today that Japan is gearing up for a number of small upstart entrants to offer airfares of half JAL's, JAS's and ANA's--trashing the lucrative air corridor. And I've got to say something instructive about what this will mean for Sapporo.
All I've got now are arguments running on fumes and no real passion for the topic to begin with. I expect that I will argue that deregulation is the way to go, and will be asked to use my homeland as an example. Huh. Some representative American. I'm formulating pretty pat points in my head ("The consumer will benefit, and more of them will want to travel if they can afford it; everybody can make out, so don't fear change."), but will need some harder evidence.
So could somebody out there please tell me a few things about US cheap domestic airfares? (snip)
Here's what happened:
Date: Thu, 13 Mar 1997
From: Dave Aldwinckle
Subject: Japan's Airline Deregulation: Prelim Report
Fellow Fukuzawans:
AIRLINE DEREGULATION IN JAPAN: A PRELIMINARY REPORT
I would like to thank all those who answered my plea for information on airfares about a week back. I received around three dozen responses, with info on everything from US airfares to contacts within the USIA, from internet links to the ethics of being the token gaijin on a Japanese TV show. Even got a flame! Anyway, one can never say this enough, but the internet is a miraculous invention, and I'm honored to have so many kind people take the trouble to help me out.
In the same spirit, I have stumbled across some information on the Japanese side of deregulation I'd like to share with Fukuzawans. The source of the most recent information is a reporter within the Hokkaido Broadcasting Corporation, just back from a chat with the Ministry of Transportation in Tokyo, with whom I had lunch. Here's how Japanese airline deregulation looks as of noon today:
DEREGULATION IS NOT A COMPLETE SHAM--AIRFARES ARE INDEED COMING DOWN
Background: Until 1996, The Ministry of Transportation had full control over Japanese airfares, routes, and how many flight slots were available to each of the three domestic airlines, JAL (dominating international flights), ANA (dominating domestic), and JAS (picking up the crumbs). This is nothing unusual internationally--most governments attending a 1994 meeting of the International Civil Aviation Organization wanted to maintain control over their own national airlines, and hence opposed American-style utter deregulation. Even the US's Civil Aeronautics Board had ultimate powers until 1978.
But that was then, and this is now. For you "lag theorists" (i.e. those that believe that Japan is a generation or so behind the US), it seems to be Japan's turn to Americanize its flying circus. The Ministry of Transportation has allowed the airlines to start setting their own prices on tickets without official permission. Guess what? The first thing the airlines did was to raise their prices (a bit), and to introduce fares for peak (August and New-Years') and off-peak (any time in betweeen) times. And certain discounts were eliminated--round-trip package deals gave way to single-ticket sales only.
Fortunately, things did start getting quite a bit cheaper, so long as you let the airlines decide your schedule (sound familiar?). Provided you made round-trip reservations a month (I think it's now two months) in advance, came back in a week, and agreed to nonrefundability, nontransferability, and nonrescheduability (they must have a easier word for this in the industry!), you could get a ticket for *half price* on certain routes. The problem was that this was neither helpful for Tarou Sarariiman, whose schedule wasn't flexible coming or going, nor for budget travellers, who might want to stay longer than a week away from home. And the fares depend on the airline and the time of the year... You get the idea. Byzantium is here, and the travel agencies, the only ferrymen who can really navigate these Stygian waters, were ready to take your coins and their commissions.
But the results: Before the deregulations, Japan's (and incidentally the world's) most travelled air corridor, between Tokyo Haneda and Sapporo Chitose, had sold 500 kms of distance to an unsuspecting public for 23,000 yen one way since 1982--making it the most expensive air corridor in the world (and near doubling any overseas ticket for people like me, salivating over cheap plane ads in the Daily Yomiuri). Now, basic (meaning open to change) tickets are around 20,000 yen off-peak and 25,000 peak, and competition between airlines means differences of a few hundred yen.
However, they DO go down all the way to 11,200 yen if you accept the "non-" conditions. Sounds much better than before. But wait, there's more!
THE NEW ROMANTICS--READY TO TAKE OFF, ONE DAY
The next stage in this process is what Sapporo's all excited about, and why I'm appearing on HBC. The news is that there are proposed new entrants to the market who want to offer even cheaper fares to Hokkaido. According to my lunchmate today, here's who they are:
1. SKYMARK (getting its money from HIS, Nomura Securities, Orix, and other sources). They are closest to achieving the necessary Ministry of Transportation approval.
2. HOKKAIDO KOKUSAI KOUKUU They are nowhere near approval, for reasons below,
3. An as-yet unnamed airline with no boss, no money, but sponsorship from Okinawa Bank, and
4. Another unnamed one with sponsorship from an English language school in Fukuoka!
Come the building of a second runway at Haneda Airport, there is room for expansion of flight slots without having to resort to dreaded 24-hour flight schedules. MOT says that they're willing to give fifteen weekly slots each to two new airlines, if only they'd show up at the dinner table. But:
TOKYO IS DRAGGING ITS FEET ON FURTHER AIRLINE DEREGULATION:
That's not surprising, since rival airlines are more idea than anything at the moment. Skymark is, as I've said, the closest airline to being online, ready to buy planes (at US $70,000,000--or 70 oku en--a pop). The other ones, however (HKK above has raised only a paltry US $5,000,000--the price of a couple of politicians' houses), are hot air. But the problem is not just money--issues dealing with staff (they can't really hire many cabin attendants and expect to stay aloft with the prices they propose), service (same with food), and safety (Skymark has made arrangements to use JAL maintenance staff, but I can just see them charging extortionate rates to even things out.) remain up in the air. Furthermore, there's nothing really landmark in the clouds that would cause any real turbulence--like Open Skies (the Americans are pushing for it so they can offer Japan domestic flights as well). So Japanese deregulation, as usual, is a mixed bag, and nobody's really levelling the plane field.
DE MO, NAN TO KA NARU KA NA...
But upstarts are upstarts. I did ask about other ways businessmen here could raise capital, since that is the biggest obstacle. Venture capitalists are nowhere near the level of the US (hell, look at how Microsoft and Netscape started up), but they do exist--it's just getting Son Masayoshi's ear. Moreover, I asked if even Richard Branson could buy into the game. Yes, as long as total shareholdings are under 50%, foreigners can get involved and not wind up like T Boone Pickens. Hum. And how about a public stock offering? Seems like sushi in the sky, but it's not impossible. It's just improbable--if anyone wants their headquarters in Hokkaido; Sapporo can hardly afford a soccer team and still can't afford a professional baseball club. So unless we get some militant housewifes who are ready to behave like Russians, we're going to have to wait for the big boys to play ball.
THE UPCOMING TV PROGRAM, FYI
Anyway, I'm going to be joining other kings of the notorious Late-Night TV in Japan next week (early Saturday morning, March 22, from 12:40 am to 1:50 am, HBC. Catchily-titled "Ten Shiru to Chi Shiru Hokkaidou". Dosanko--set your VCRs if you're interested). They are:
1) Mr HAMADA, one of the bosses of Hokkaido Kokusai Koukuu, who will report on the obstacles facing him,
2) Mr INOUE, Department of Economics, Hokkaido University, who will talk macro,
3) Ms KOUNO, CEO of Cube Advertising, as a local opinion leader, and
4) little ole me, the token American, who will give his freshly-acquired perspective on American deregulation, along with his favorite canards (Hokkaido Dependency Theory--click here if you're interested), to an ever-unsuspecting public.
It will be prerecorded and casual--dinner and drinks, even--and I expect I'll probably give another report to Fukuzawa when the dust settles.
That's the status of my research so far, as concerns the Japan side. Corrections and comments welcome (especially from professionals Dave Leheny and Maggie).
And to think I used to hate writing term papers in school...
Dave Aldwinckle
Sapporo
Well, the TV show happened as scheduled. I decided to write up how it went. To conclude this html, here it is:
Date: Mon, 24 Mar 1997
From: Dave Aldwinckle
Subject: Airline Dereg: Synopsis of TV program
Fellow Fukuzawans:
AIRLINE DEREGULATION: HOW IT ALL LOOKED ON TV
I was on a local TV program last Friday, talking about how new Japanese airlines could have an impact upon Hokkaido, and I promised you a report on how it all went. In three words: "not too dusty". Facing the daunting task of 1) collating news from arms-length sources, and 2) making it fit in remarkably scant space, I came out of it with a profound and newfound appreciation for reporters and broadcasters. I realized it ain't easy to have a meaningful comment every time the camera turns on you, and I got holes poked in my pet theories of mass-media subterfuge and censorship.
First off, let's talk about the collating process: the storm before the calm:
THE DELUGE OF BACKGROUND INFORMATION
As I said, the reason I was called onto the show in the first place was because they needed a Japanese-speaking expert on American deregulation. Perhaps with the same logic that any native speaker can teach English, I was referred to HBC by a friend of a friend who thought my abilities could portray the American side better. I asked HBC why they didn't ask for somebody from the US Government or the travel agencies, and they said that a private citizen and university scholar "would look less tendentious" (I'm paraphrasing). They also implied that there aren't enough Americans around here to scrape together, so it was a classic case of being in the right place at the right time.
So here I was, charged with speaking about something I knew nothing about, so I got on my bike, accessing databases and asking people for information. Be careful what you wish for--you just might get it; from Fukuzawa and Friends alone, I received nearly a hundred pages of airfares, stats, anecdotes, reports, and ethical musings. Thanks, y'all. Then the USIA in Tokyo and Sapporo (as a swansong) really came through, providing me with Web sites and hard copy in the hundreds on US dereg and Open Skies.
Fortunately, I had ten days to upload everything into my mind and process it. But I realized that under a scoop-and-deadline system, a nonspecialist (or a reporter without language ability--oops!) is completely dependent on the honesty of his sources. All I could do was cut and run, relying on the accuracy of previous articles (which in effect is hearsay) and hope that I was not helping to perpetuate urban folklore.
HOW MY RESEARCH TURNED OUT
Since "Open Skies" was immaterial to the case (the show was about how a new Japanese airline offering half-price fares could change Hokkaido, not how deregulation could change Japan in general), I narrowed it down thus: 1) what is deregulation, American-style? 2) what have been the benefits, and 3) what have been the shortcomings?
On the day of the program's recording, I went to HBC six hours early and gave them the following synopsis:
WHAT IS US DEREGULATION?
I skipped the history and explained the existing hub-and-spoke system, showing that nowadays there are 34 hubs in the US (cf. labelled map of the Continental US) linking the country. Pointed out the clustering along the East Coast (the NYC-to-DC conurbation, and along the southern seaboard--three hubs in North Carolina alone) and the West Coast (California and adjacent states). Then showed a to-scale comparison map of Japan (it's only 1/20th the size of the Continental US) with Japanese hubs (Tokyo Narita and Haneda, Nagoya, Kansai, Fukuoka, and Sapporo).
The point is that while the US is wide and rectangular, Japan is long and thin--so comparisons between the two systems may be inappropriate. But if (and this is a humungous "if") there is full deregulation in Japan, Sapporo Chitose could become a major hub for nether regions--Hokkaido proper, Alaska and points beyond (Tokyo flights to the US already take the Aleutian route if they don't go via Hawaii), Seoul, Beijing, Vladivostok (you have to go via Niigata currently), and even Northern Europe (via polar route).
BENEFITS OF US DEREGULATION
1) Development of regional airports into hubs by airlines. Who'da heard of Newark Airport as an alternative to JFK or La Guardia if not for People Express? How about Omaha NB and Raleigh/Durham NC (both Midway Air), Nashville TN (American Air), Charlotte NC (USAir), or Greensboro NC (Continental Air)? Big airports have gotten bigger, and other local airports have seen unanticipated growth.
2) Fewer block bookings and the end of advance reservations for some airlines and routes (ex. Southwest Air). Which means that, say, Japan Travel Bureau wouldn't be able to hog half an airplane months in advance.
3) Development of commuter routes that offer, essentially, a bus service with wings.
4) And, most famously, significantly cheap fares! Looking at relative distances, Sapporo to Haneda is 510 miles, or roughly the same distance as San Francisco to San Diego, Las Vegas, or Portland. Sapporo to Kansai is 653 miles, or SF to midpoint between Seattle and Vancouver. Sapporo to Naha, Okinawa (from one end of the country to another) is 1495 miles, or SF to Dallas. (I was then told that HBC only cared about Sapporo to Tokyo fares, so I'll omit those here too.)
For normal (off-peak, not discount) fares, *bought in Japan* (this is the only fare estimate I could get without accessing every single US airline's home page; the internet travel agencies are still nacent) with appropriate commissions given to JTB (they wouldn't give me the net estimate), here's what I found:
Sapporo to Haneda one way, cheapest possible off-peak without months' advance booking, is 24,500 yen through Japan Air System. But in the US, converting at 123 yen to the dollar, JTB would give me:
SF to SD: 13,400 yen
SF to Portland: 18,400 yen
SF to Vegas: 27, 500 yen
and this is before restrictions, round-trip fare discounts, and seasonal price wars.
The bottom line is that even with a recently appreciating dollar, fares are generally quite a bit, if not a lot, cheaper than Japan's. This is, of course, not news. What does stir the economists' heart is that deregulation has made things even cheaper; for all air routes, comparing the years 1979 and 1994, US fares per passenger mile have come down around ten percent on average (Source: _Consumers' Research_, July 1996, pg 29-32). And we all know the spectacularly cheap fares when all the planets are in conjunction: SF to SD one way 3500 yen, SF to Portland 8500 yen, Salt Lake City to Vegas (also around 500 miles) 5200 yen. And round trip fares the whole length of Japan (say, Houston to Hartford CN for 20,000 yen) which are less than one way Sapporo to Tokyo (only one third of Japan)...
I know, your eyes are beginning to droop after being bombarded by figures, so I'll conclude. The benefits of deregulation have been very straightforward: more people fly, more airplanes fly, more regional economies (not to mention complementary industries--car rentals, say) have been vitalized, and more incentives for consumers (frequent flyer miles, friends fly free, etc.) have taken off. Doubtful whether they would have otherwise.
But of course this is too good to be true. Now for
THE DEMERITS OF US DEREGULATION
The clearest one of all is:
1) COMPLICATION "How much?" is no longer an easy question to ask a travel agent. Read the small print on your tickets: Off-peak, Blackout, Nontransferable, Nonrefundable, etc--a minefield for those with unpredictable schedules. Airfares change by the day, and if you're the type who like reading things like stock market pages, you can join the airlines' email lists and get weekly estimates for your favorite routes. As a result:
2) CONTINGENCY You are at the mercy of the airlines if you suffer from inelastic demand (oops! economics jargon). I mean, if you want to go somewhere in a hurry (say, to a funeral), you're going to pay through the nose. But if you play ball (submit to Saturday Night Stayovers, plan ahead, shop around), you can get a good deal. Problem is that the more likely you are to travel, the more likely there's going to be a price hike, and the airlines know that. The temptation to beat the system is frustrated by those who manage it, making for larger premiums for convenience, and savings basically for those who are willing to invest the time in extensive shopping.
3) CRASH AND BURN They say that the airlines have lost more money in the twenty years of deregulation than they've ever made since the Wright Brothers (Source: Petzinger's _Hard Landing_). That's a bit suss, since thanks to American accounting law, airlines can claim they lose money every year by depreciating their fleets to avoid taxes, while presenting rosier figures to the stock market (which hasn't stopped investing). But the fact is that Darwinianism has taken hold and sent big names like Braniff, Eastern, Pan Am, and People Express (remember them?) into bankruptcy or buyout. And the constant cycle of cutback and rehire has made the airline industry a very unpleasant place to work. Flight attendants have seen real wages drop by 40% and pilots 22% since the 70's (cf. Cremieux in Cornell's _ILR Review_ Jan 96). And as a result:
4) CHOKE ON YOUR PEANUTS In-flight service, as anecdotal evidence would have it, has gone down. Fewer meals and more nuts-to-you, less accommodation of requests, and even less fresh air pumped into cabins (I snow you not!)
5) CONCENTRATION It is a pet complaint that the concentration of traffic into hubs has destroyed direct flights, and one has to travel both legs of a triangle instead of the hypoteneuse. Others complain about lengthening layovers (although Consumers' Report say it's only been about ten minutes extra on average) and inability to switch airlines.
And I left out safety concerns (because the number of accidents has not increased substantially since deregulation, says CR again), due to hub overcrowding, aging fleets (especially for new airlines, which resort more to turboprops or obsolesced jets), fudging inspections, etc.
But as you can see, this spiel has gotten very long. How was I going to make this pertain to Japan? My point is that this all means nothing as an example unless real deregulation--crucially flying-slot allocation--occurs (how else is traffic going to shift to new hubs?). And the Ministry of Transportation shows no sign of relinquishing control over that.
UM, NICE WORK, DAVE, BUT YOU CAN'T SAY ALL THAT ON TELEVISION
As I spelled out the above (abbreviated) presentation to them, my HBC hosts were very clear: verbose. All told, this was to be an hourlong program, including ten minutes for commercials, another fifteen for video clips and soundbites, and words from the host. And with three other commentators (one of them the lynchpin of this program--the boss of one of the upstart airlines), we were looking at between five and six minutes speaking time per person. Hence I was facing the tyranny of the time clock.
Fortunately, I was used to this. In my satellite broadcasting courses (where I get to jabber for nearly ninety minutes straight), I have learned both how to kill time and squeeze in info as the hourglass runs out. But on satellite, I was allowed to be boring like any other long-winded Japanese teacher. With real television (and the high value placed on the ability to entertain), I was in new waters and couldn't rely on sound bites to spruce me up.
Solution: I told the host that I would wait for her to feed me questions. She knew what I wanted to say, so I would leave the timing up to her. And that was how the program went.
THE PROGRAM: TEN SHIRU CHI SHIRU HOKKAIDOU ("The Hokkaido that knows Heaven and Earth", whatever that means), prerecorded Wednesday, broadcast Saturday morning, March 21, at 12:40 am.
Title: "Will a half-price airline change Hokkaido?"
Host: Nomiya Noriko. Guest Commentators: Inoue Hisashi (Professor of Industrial Policy, Economics Dept, Hokkaido University), Hamada Teruo (nearly-CEO of Hokkaido Kokusai Airlines (HKA)), Kouno Akemi (CEO of Cube Corporation, and local opinion leader), and little ole me (Instructor, Liberal Arts Dept, Hokkaido Information University).
SYNOPSIS
Alright, I'll give you the flow of the program in summary:
The show opened with a video clip, introducing a new airline offering airfares for half the price of regular fares. Reactions? People in Chitose terminal were sound-bit to say that they would love to fly cheaper. Now, how would that come about?
End of video. Host Nomiya gave us individual introductions and asked about our "expectation level" (kitai do) for a new airline to succeed in the Japanese marketplace. Both the business bosses Ms Kouno and Mr Hamada were upbeat (of course), giving figures of 99% and 120% respectively, while academics Dr Inoue and myself were more morose (80% each). This was mainly because Dr I knew just how difficult it would be to cut costs, while I doubted whether the big boys (particularly MOT) would create conditions that would allow HKA to succeed.
After our first commercial break (gosh, it's amazing how fast time flies when everybody has to have a turn speaking!), we had another set of video bites talking about pricing. People saying the 24,000 yen one-way fare to Tokyo is expensive, and analyst Paul Smith at HBSC James Capel Ltd. stating that everything--from wages to airport use fees--is priced outrageously.
Now with the new runway starting up in July 97 at Haneda Airport, 40 slots more per day are available, and HKA wants twelve of them. But MOT has decided that the two new airlines (second one called Skymark) would only get three each. A Mr Sugiyama at MOT said in an interview that that decision was based upon many factors, but a dour Mr Takahashi at Haneda, who controls the slots, said frankly that the new guys should learn their place:
"Offering cheaper fares is one thing, but to go so far as to use "half price" as a catch phrase is uncalled for.... It's gone beyond a joke (warunori da) when the new guys say they aren't getting enough. Stop acting bigger than your boots (dekai kao suru na) and be thankful you're even getting a chance."
A bit acid, but the next video clip showed that HKA is in fact more bluster than beef: Hamada himself admitted that an actual half-price fare may be pretty difficult, and HKA's second-in-command said he is scouting Tokyo fo a VP and a few other bosses.
End of soundbites and back to live action. Our host asked for motives, and Hamada mentioned the reenergization (kassei ka) of Hokkaido's industries, and how important access and transportation is for local vitality. And a flight time of 1 hour and 20 minutes--a mere bus ride-for 48,000 yen round trip is a huge handicap for us. The mileage should be worth much less.
I was asked to say a few words about the American example, and my puerile point was that America was cheap, Japan expensive. As proof, we proffered a flip to show the price differential (25%) between the Sapporo-Tokyo and the San Francisco-Portland corridors. I noted that even this price can be more than halved with good timing.
Inoue and Kouno discussed the unfairness of the situation. Inoue said that that a round trip package tour for Tokyoites to Sapporo, including hotel for one night, can go for 20,000 yen--less than half the cost of the round-trip ticket alone for Sapporo to Tokyo [NB: Hokkaidoites don't get this deal because Tokyo doesn't need Sapporo's money as much as vice versa. And our department stores, like Marui Imai at Sapporo Factory, only offer half-price discounts to tourists, not locals]. Kouno said that with the time involved getting around, a trip to Tokyo means an overnight stay in a flash hotel, with no special deals. Ouch.
Hamada: We all know this situation, we think it's unfair, expensive, and inconvenient. It's been 34 years since anyone's entered the market. If the government is ready to deregulate, now is the time for us to see if it's for real.
There were a few more points about the efficacy of pricing with high fixed costs, whether MOT was actually going to let slots appear so that money could be made, and assorted chaff when the host kept passing the mike to somebody who wasn't particularly ready to comment. Then she fed me my line asking how things turned out in the US.
Hum. I looked down on my copious notes and, realizing on a good day I'd have about thirty seconds (much absorbed by hesitation noises), and settled for the pat, "There've been some good points and bad points. One good point has been stimulus of local economies with the dispersal of hubs." Showed maps, compared national sizes, mentioned how this has lowered prices by a tenth, and let it go. Hamada then took the ball and rounded out the segment with some bureaucrat bashing. He doubted whether the vaunted "hole in the administration" would be big enough even within a few years to let his airline fly through it.
After another commercial, the topic and intro video turned to about how one could cut costs by half. Skymark Airlines (the other new one, much closer to the April 1 finish line) proposes hiring foreign pilots and stewardesses, leasing jets, subcontracting maintenance, and doing away with free luggage service. Consumers commented that they don't need so much service on a hourlong flight. But ever-sour Takahashi at Haneda poured scorn by pointing out how expensive wages are for Japanese pilots, attendants, etc. so it seems like pie in the sky.
America was mentioned in the next video segment: after the 1978 deregulations, there were as many as 80 airlines, but now only 11 remain. Cost cutting has changed things dramatically. Moreover, problems arise if safety becomes part of the cost cutting. The Japanese airline industry has a shortage of planes, and leasing old ones is not going to help matters. End of video.
So now Host Nomiya turned to accounting. How is it possible to lower costs by half?
We looked at a schematic for the proportion of costs, March 1996, courtesy of HBSC James Capel:
Fuel 12.7%
Airport use fees: 12.2%
Commissions to travel agencies: 8.5%
Assorted administrative costs: 8.1%
Maintenance: 7.5%,
Depreciation (genka shoukyaku hi): 5.3%
Miscellaneous: 26.1%
Hamada noted that fuel and use costs were bureaucratic problems. But wages and travel agent fees are negotiable with some wangling (Arubaito Attendants, reservation phone numbers on the outside of the plane, internet connections). Inoue reaffirmed his doubts about the efficacy of a "half-price" ticket--isn't a less-low price okay? Especially since prices are in fact already coming down. [It was also noted elsewhere that MOT has been using some administrative guidance, forcing the Big Three to lower personnel costs to around 16% to squeeze the new entrants more.] Kouno noted that other measures, such as tax breaks, lowered use costs and rents on facilities, could open windows. Doing away with drinks alone would save 0.1%.
I then got hit with a question about airport use costs in America (which I hadn't researched), so I admitted ignorance. I instead switched to a point about dereg: free the supply of flights. No matter how much you cut costs, the same number of slots means no new opportunities. So if there's going to be any meaningful dereg, it has to be total, meaning people can get fired, hubs can shift to cheaper airports (such as Hakodate, or even the Air Self Defense Forces' playground near downtown Sapporo, Okadama Airport), and planes can fly where they like.
Hamada answered a criticism from MOT about HKA's concentrating on local routes; MOT had called it "underhanded" (zurui). But Hamada, with pinache, said that there's nothing wrong with HKA's practicing on profitable routes within Hokkaido and making money. I added that MOT's statement was thoughtless (hijoushiki), given that airlines in the US (like Southwest) specialize in commuter routes, and are among the healthiest airlines. Is Southwest not flying all the way to NYC "zurui"? Of course not. That's just how supply and demand works.
We finished our last commercial interruption and headed for the home stretch: Hokkaido's penalization by the status quo.
Hokkaido's businesses are punished by the high airfares. Companies which have to send employees on trips to Tokyo or Kyushu, usually around 20 times a month, find that things add up. So the big Hokkaido companies, if they want to be players, have to move their headquarters down to Tokyo, making Sapporo a "branch economy" (shiten keizai). These straddled companies would be the biggest benefactors of a cheaper airline.
But businesses aside, there still remains the question of tourism [NB: especially when, according to the Economist, 60% of Japan's air passage is designated as "leisure"]. So how can HKA target skiiers if they won't take their luggage?
End of video. Host Nomiya asked Hamada which group he was going to target, and he indicated Hokkaido businesses, not Tokyo tourists, since industry is hurt more by the current situation. Inoue noted how Hokkaido's frontier spirit has faded, and Kouno added that we need something that truly reflects Hokkaido. A local hero.
I spied a prime opportunity for one of my diatribes on dependency. I piped up to say that Hokkaido has come to depend on Tokyo for everything. Where is the headquarters of Sapporo Beer? Not Sapporo. Tokyo. What have we got that is the pride of Hokkaido? We don't have a baseball team, we barely have a soccer team [that raised some eyebrows, but it's true]. So go for it. If something gets started, it has the chance to take off. Anyway, we need something up here that we Dosanko can look upon and claim is ours. An airline would be a good start.
Hamada agreed, and said that once in the market, a new airline can find ways to make ends meet. So let's do it.
And thus finished the program.
As you can see, I got to say very little of what I originally planned. But that was my job--I was not the main guest, and my lot was just to be there and offer a meaningful comment when asked. Acquiescing to censorship? Nah. I feel that I did the best I could under the circumstances.
Alright, that's a wrap. I promised you a full report on the proceedings. Hope this was full enough. Once again, thank you all very much for helping me participate fruitfully in a topic that means a lot to people up here.
Dave Aldwinckle
Proud Dosanko