JAL Quits Saipan

JAL's pullout announcement shocked the Northern Marianas' visitor industry. The airline carries about 50 percent of CNMI's tourists from Japan. More than 70 percent of the commonwealth's tourists come from Japan. JAL has a daily flight from Narita to Saipan, and a second from Kansai to Saipan. The airline carries an average of 15,000 tourists monthly or 185,000 annually. Northwest Airlines also services the route.

Local JAL management informed CNMI officials about the carrier's plan in late May, sending elected, tourism and tourism-related business officials scrambling to fill the void.

JAL is the latest and the biggest Japanese investor to pull out of the Northern Marianas during the past year and a half.

Saipan’s “sun and fun” allure isn’t enough to keep JAL in market. Photo: Floyd K. Takeuchi

Shinichi Yoshida, JAL's Saipan-based regional manager and Kunio Tomita, manager of sales and airport traffic on Saipan, both acknowledge the company is pulling out and that the Marianas Visitors Authority (MVA), the Commonwealth Ports Authority (CPA), and other businesses have been informed, along with JAL's 20 local employees. Asked by Pacific Magazine whether the airline would retain the route if requested by Emperor Akihito on behalf of the Northern Marianas, Tomita says: "That would be a different story. Maybe." Governor Babauta was expected to make that pitch during the Imperial family's visit to Saipan on June 27-28.

JAL has been flying to Saipan for almost 30 years. Yoshida says it would be "very hard" for JAL to return to Saipan in the future after it pulls out. Several publications from Japan have indicated that the major reason for the pullback is on-going major corporate restructuring aimed at ensuring profitability. Rising fuel costs and the recent safety issues in Japan are blamed for the decline in the company's revenues.

The airline is also cutting flights to Guam, Honolulu, Korea, Bali and Ho Chi Min City in Vietnam.

But no doubt, the CNMI would be the hardest hit economically. MVA Managing Director Vicky I. Benavente estimates the CNMI government is expected to lose up to $80 million a year in revenue. The average tourist from Japan stays 3.4 days and spends about $500 per stay. CPA Executive Director Carlos H. Salas says his agency stands to lose $2.2 million annually in landing and passenger departure fees.

Benavente adds that JAL's pullout would be devastating to the tourism industry if a replacement airline is not found. As soon as she got word about the proposed pullout, Benavente started contacting various tour agents, different organizations in Japan making annual pilgrimages to Saipan, and even initiated a petition drive collecting 6,000 signatures in three days. The petition, urging JAL not to withdraw from Saipan, was presented to JAL corporate officials in Japan.

Salas says he understands JAL's business decision. "I believe they are focusing on profitable routes like China and perhaps utilization of existing aircrafts to this route bear better yields than competitive airfares in our region," Salas says.

The Japan Business Executives Council (JBEC), an organization of top Japanese business executives on Saipan of which JAL is a member, appealed to the general public to sign the petition against withdrawal, urged government officials to go to Japan and meet with JAL corporate officials, and pressure both the U.S. and Japan governments to designate another carrier to service the Japan-Saipan route.

Hotel Association of the Northern Mariana Islands (HANMI) President Lynn Knight says the association is assisting with the funding of a study on the economic impact of JAL's pullout. An association survey of its own members shows the hotels will continue with the renovations and improvement projects as many of them are already underway. Knight warns however, that if there is a significant drop in hotel occupancy after JAL pulls out, HANMI may go into austerity measures in terms of its operations "including layoffs."