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Airlines charging a premium for services from Tokyo Haneda Airport

29-Sep-2011

Airlines are charging a considerable premium on Asian services from Tokyo Haneda compared to the city's former exclusive international gateway, Tokyo Narita, driven by increased demand from business passengers as Haneda opens up to new services. The price gap has widened since Haneda opened its new international terminal and fourth runway in late Oct-2010. The convenience factor (Haneda enjoys greater proximity to downtown Tokyo) is driving pricing, making it a key facility for incumbent airlines All Nippon Airways and Japan Airlines to defend.

Tokyo Haneda, Japan’s busiest airport, Asia’s second busiest (after Beijing), now accounts for 20% of all seats on international services from the Tokyo area. Tokyo Narita has an 80% share and is the world’s 20th largest airport by system ASKs, with a considerably larger proportion of long-haul international services than Haneda.

While the 11-Mar-2011 earthquake and tsunami dented demand for international travel out of Japan, business travel out of Haneda held up relatively well, with the exception of the month of Mar-2011.

Japan’s largest 10 airports by seats, ASKs and movements: 19-Sep-2011 to 25-Sep-2011

Rank
(seats)

Airport

Seats

Total ASKs

Movements

1

Tokyo Haneda

1,814,682

1,915,819,606

7,954

2

Tokyo Narita

792,139

3,977,478,235

3,171

3

Sapporo Chitose

486,798

427,205,954

2,400

4

Fukuoka

432,077

376,847,556

2,481

5

Okinawa Naha

416,240

453,053,529

2,018

6

Osaka Kansai

393,547

1,032,321,153

1,827

7

Osaka Itami

293,843

142,662,788

2,004

8

Nagoya Chubu Centrair

266,380

473,244,527

1,632

9

Kagoshima

146,450

104,712,148

1,176

10

Nagasaki

90,806

65,680,474

748

The number of Japanese who departed the country from Haneda Airport soared 160% year-on-year in Jun-2011, with total international passenger traffic up by around 111% in both Jun-2011 and Jul-2011. At the same time, Tokyo Narita has witnessed international traffic contractions in every month since Oct-2010, according to CAPA's Airport Traffic Benchmark Tool.

International traffic Comparison for Tokyo Haneda Airport, Tokyo Narita Airport from Aug-08 to Sep-11

The number of leisure travelers from Tokyo Haneda to Asian destinations has also increased over summer 2011, with services between Tokyo Haneda to North America also ramping up. However, as international services from Haneda depart either late at night or in the early morning, the fare premium has not applied equally to these routes and Tokyo Narita remains the primary hub for long-haul international operations. 

Fare premium on Asian services from Tokyo Haneda compared to Tokyo Narita

According to ITA Software data for Sep-2011, the cheapest available published economy fares from Haneda to Bangkok Suvarnabhumi are priced in a range of USD998 to USD2725 in Sep-2011, compared with USD602 to USD958 from Narita.

NB: All the fares graphs presented here are available on demand at the various airport profiles on the CAPA website, or the 'Fares & Yields' section in the Aviation Data drop-down in the main blue navigation bar on this website.

Tokyo Haneda Airport Most Convenient Route in Economy Class Return Fares Travelling from Bangkok Suvarnabhumi International

Tokyo Narita Airport Most Convenient Route in Economy Class Return Fares Travelling from Bangkok Suvarnabhumi International

The difference is equally as extreme on business class services, with the cheapest Haneda-Bangkok J-class fares in the USD2057 to USD3678 range, compared to a USD1325 to USD2557 range between Bangkok and Narita. 

Tokyo Haneda Airport Most Convenient Route in Business Class Return Fares Travelling from Bangkok Suvarnabhumi International

Tokyo Narita Airport Most Convenient Route in Business Class Return Fares Travelling from Bangkok Suvarnabhumi International

The difference in cheapest available published fares between Tokyo and Beijing Capital is less extreme but still evident, with both Tokyo Haneda-Beijing and Tokyo Narita-Beijing sectors seeing declining fare levels through Sep-2011, although a premium of 10-40% at Haneda is evident. Cheapest fares from Haneda to Shanghai Pudong are priced at nearly double those on services from Narita for early Oct-2011, a Nikkei survey of airfares for early Oct-2011 said, with Haneda-Singapore around 39% higher than from Narita. These two routes had just a 10-20% price gap when Haneda's international terminal opened 12 months earlier.

Tokyo Haneda Airport Most Convenient Route in Economy Class Return Fares Travelling from Beijing Capital International Airport

Tokyo Narita Airport Most Convenient Route in Economy Class Return Fares Travelling from Beijing Capital International Airport

Tokyo Narita Airport Most Convenient Route in Business Class Return Fares Travelling from Beijing Capital International Airport

Tokyo Haneda Airport Most Convenient Route in Business Class Return Fares Travelling from Beijing Capital International Airport

On Tokyo-Hong Kong services, economy services from Haneda are priced in the USD532 to USD1262 range in Sep-2011, compared to USD404 to USD1826 at Narita, for a premium of 35-45%.

Tokyo Narita Airport Most Convenient Route in Economy Class Return Fares Travelling from Hong Kong International Airport

Tokyo Haneda Airport Most Convenient Route in Economy Class Return Fares Travelling from Hong Kong International Airport

Business fares from Haneda are priced at a more extreme premium, in the USD2148 to USD2586 range, compared to USD1096-2157 from Narita, for a 32-96% premium from Haneda.

Tokyo Narita Airport Most Convenient Route in Business Class Return Fares Travelling from Hong Kong International Airport

Tokyo Haneda Airport Most Convenient Route in Business Class Return Fares Travelling from Hong Kong International Airport

New terminal and fourth runway a game changer for Tokyo region

Tokyo Haneda Airport’s new international terminal and fourth runway (the 2500m runway D) became operational in Oct-2010. The new terminal, built under a private finance initiative, is a five-storey structure with a floor space of approximately 154,000 sqm, housing approximately 100 retail outlets. Japan Airport Terminal Co (JATC), which runs Haneda’s terminals, expects some seven million passengers p/a to use the new terminal. The 50,000 sq m extension to the second terminal increases the terminal's total floor space to approximately 250,000 sqm. JATC spent approximately USD233 million (JPY19 billion) extending the existing terminal building to the south.

Meanwhile, the new (fourth) runway increased the number of slots to 60,000 yearly slots - 30,000 day and 30,000 for early morning and late night services for international services as air transport movements increase from 285,000 to over 400,000 annually.

The initial infrastructure developments have enabled the launch of scheduled international services after a gap of 32 years, providing competition for Narita which had enjoyed its role as the sole provider of international flights to and from Tokyo since 1978. A number of airlines were quick to commence international operations from Haneda (see appendix for full list). While many international carriers launched international services from 31-Oct-2011, some involving small shifts from Narita, the two metropolitan airports have insisted they are working together in harmony, not rivalry.

Between 1998 and 2008, Haneda Airport grew by around 30%, with growth from 51 million to almost 67 annual million. However, in 2009, passenger demand declined by over 7% to just under 62 million passengers and it also lost its role last year as Asia’s busiest airport to Beijing Capital. But growth is returning. Haneda Airport expects to handle over 8.5 million international passengers by 2012 and more than 10 million by 2015 - largely at the expense of Narita.

Tokyo Haneda Airport traffic growth: 1998 to 2010

In terms of system traffic, Haneda is considerably larger than Narita, with 64.2 million passengers in 2010 (+3.5%), making it the fifth busiest airport in the world, and compared to 33.9 million at Narita (+5%), which ranks outside the world’s top 30 in terms of passenger numbers. At present, Tokyo Haneda has more than double the capacity (seats and ASKs) as Tokyo Narita, with 2.5 the number of weekly aircraft movements. Tokyo Haneda, not surprisingly, has reported stronger growth than Tokyo Narita, since Oct-2010, with Haneda recovering better from the 11-Mar-2011 earthquake and tsunami than Narita.

System traffic growth comparison for Tokyo Haneda Airport, Tokyo Narita Airport from Aug-08 to Sep-11

Continued capacity expansion is planned at both Haneda and Narita

In response to these threats, Narita International Airport Corporation (NIAC), which was created by the government in anticipation of eventual privatisation, aims to increase its domestic routes to as many as 20, more than double the current figure, by FY2014. Presently, the airport offers only eight domestic routes and plans to increase this number in FY2012 to provide improved connections between domestic and international services and improve competitiveness.

The addition of new domestic routes is part of the airport's plan to increase its own annual landing and departure slots, which stand at 200,000 for international and 20,000 for domestic services. Total slots are expected to be increased to 300,000 in FY2014, with domestic slots to be raised to 30,000. This will be supported by a new passenger terminal.

Narita Airport Slot Increases

Narita Airport

Mar-2010

FY 2011

FY 2012

FY 2014

220,000

250,000

270,000

300,000

Narita is also pursuing new business leads, with plans to expand its offer to Japan’s small coterie of LCCs (and foreign ones), by constructing a low cost terminal (LCT) by 2013 to support, among other LCCs, the launch of AirAsia Japan, as well as expanding the existing terminal to reinforce its position as an international hub airport.

Planned expansions at Haneda will grow capacity to a total of 90,000 international take-offs and landings by the end of 2013, an increase of 50% from the current level. In Jun-2010, the Ministry of Land, Infrastructure and Transport also announced an expansion of the new international terminal, to be completed by the end of Mar-2014. The expansion will include a new eight-gate pier to the northwest of the existing terminal, an expansion of the adjacent apron with four new aircraft parking areas, a hotel inside the international terminal, and expanded check-in, customs/immigration/quarantine and baggage claim areas.

Haneda Airport Slot Increases

Haneda Airport

Oct-2010

FY 2011

FY 2013

Daytime

331,000 (incl. 30,000 for intnl)

350,000

407,000 (*1)

Night/early morning

40,000 (incl. 30,000 for intnl)

40,000

40,000

The Land, Infrastructure, Transport and Tourism Minister, Sumio Mabuchi stated: "We'd like to develop the two airports into a hub as a single unit," The MLIT is also considering a new division of roles between the airports, with Haneda “serving as a hub for business travellers and Narita serving international tourists.” 

Tokyo Narita remains dominant international airport

Tokyo Narita remains considerably larger than Haneda in terms of international passenger numbers and capacity, with Haneda still facing a number of restrictions, but its dominance is being eroded.

International traffic Comparison for Tokyo Haneda Airport, Tokyo Narita Airport from Aug-08 to Sep-11

Although demand to use expanded Haneda is high, the slot supply for international flights is still limited (to around 70 international services), with a lack of daytime international slots. The fourth runway resulted in an increase of 110,000 slots, although only 60,000 slots were allocated for international services. According to the growth plan, Haneda will have 90,000 international slots by the end of fiscal 2013. Combined with Narita, the two airports will be able to provide 400,000 international flight slots, or twice the current capacity, although Narita's flight operations are limited to 06:00 to 23:00.

Commenting on this situation, Lufthansa general manager for Japan, Otto Benz, recently commented: “From the standpoint of European airlines the situation at Haneda is still very disappointing. While Japanese government strategy describes a hub concept at this airport, the reality shows that European carriers cannot benefit by two-way feed offered by Japanese carriers as EU [European Union] airlines are constrained to operate only between 2200 hours and 0700 hours. The only feasible departure time under the given time-window for a European airline from Haneda would be between 0600 hours and 0700 hours and this would mean no connectivity from other Japanese cities, whilst Japanese airlines and Asian hub carriers could easily feed their Haneda flights with their planned flight schedules.”

Similarly, JAL President and COO Masaru Onishi has said the damage to Narita would be “limited, as we will not be allowed to fly intercontinental routes during the day out of Haneda, a handicap to serve many overseas markets”. “The big issue is, in fact, long-haul destinations from Haneda, as the new runway has limited length. However, it might be possible that we could put our new Boeing B787 [there] for some intercontinental operations,” added Keisuke Okada, ANA executive VP alliances and international affairs.

See related report: Boeing Dreamliner delivery to ANA begins 787’s Asia-Pacific dominance

Tokyo Haneda Airport’s expansion into the international area have acted as a game changer for the Tokyo region as Haneda will take on more international services, while Narita has hit back by enhancing its domestic air service network. Both airports are planning expansion, in terms of both international operations, and also to support the launch of three domestic LCCs into the market in 2012. The stage is set for a dynamic decade in Tokyo.

Appendix

Prior to the Oct-2010 expansion, Haneda handled predominantly domestic and regional (intra-Asian) services, as a hub for carriers including All Nippon Airways, Japan Airlines, Skymark Airlines, AirDo and Skynet Asia Airways (Solaseed Air). With a focus on these operations, Haneda handles more than double the number of domestic passenger than Narita, although domestic traffic has weakened on a year-on-year basis since Oct-2011. Meanwhile Narita, which is located considerably further away from the central region of Tokyo (14 km as opposed to 57 km), is focused on international services. Intriguingly, Haneda is also known as Tokyo International Airport, a throwback to the days when it was the original primary airport for the Japanese capital. Narita Airport is actually in the city of Narita in Chiba Prefecture.

Domestic Traffic Comparison for Tokyo Haneda Airport, Tokyo Narita Airport from Aug-08 to Sep-11

Domestic traffic growth comparison for Tokyo Haneda Airport, Tokyo Narita Airport from Aug-08 to Sep-11

Source: CAPA - Centre for Aviation – CAPA Airport Traffic Benchmark Tool

ANA is the largest carrier at Haneda ahead of Japan Airlines and Skymark, while JAL is the largest carrier at Narita, ahead of ANA and Delta, in terms of system capacity (ASKs and seats).

ANA has stated it hopes Haneda provides the opportunity to expand its international network. ANA network planning director Hiroshi Shibata stated the carrier sees Haneda as "our base airport where we can use our full strength." "In the daytime, we will continue our solid domestic operations, which are a big part of our profit. International flights still have daytime restrictions, so we will fly to areas where we are allowed. . . . As for late at night, when planes can't use Narita, we will fly to where there is high demand," Mr Shibata has said. He added that combining both international and domestic services at Haneda will greatly expedite transits. Japan Airlines similarly sees the potential in Haneda with director of corporate planning Eiji Takemura stating: "There's no doubt that Haneda will be a hub for our management strategy. We'd like to target business users who want to use their time efficiently".

Tokyo Haneda Airport capacity (seats per week) by carrier (26-Sep-2011 to 02-Oct-2011)

Tokyo Narita Airport capacity (seats per week) by carrier (26-Sep-2011 to 02-Oct-2011)

58 domestic and Asian destinations are served from Haneda at present, with three of North Asia’s largest routes linked to Tokyo Haneda, including those to Sapporo, Fukuoka and Osaka Itami. In terms of long-haul international destinations, Haneda offers service to  two destinations (London Heathrow and Paris CDG) in Europe and three in the US (Honolulu, San Francisco and Los Angeles).  Only 11% of total seats are deployed international at present, or 33% of total ASKs. At Narita, 91.4% of seats and 98.9% of ASKs are deployed internationally, indicating the international focus on its operations. 56 domestic/Asian destinations are served from Narita, with 16 destinations served in Europe, one in Latin America, two in the Middle East and 18 in North America.

Top 10 Northeast Asia routes (by system traffic): 19-Sep-2011 to 25-Sep-2011

Rank

Origin

Destination

Total Seats

Total ASKs

Frequencies

1

Tokyo Haneda Airport

Sapporo Chitose Airport

271,087

222,833,514

478

2

Jeju Airport

Seoul Gimpo International Airport

257,088

115,946,688

667

3

Fukuoka Airport

Tokyo Haneda Airport

200,656

176,577,280

358

4

Hong Kong International Airport

Taipei Taoyuan International Airport

145371

121384785

241

5

Tokyo Haneda Airport

Okinawa Naha Airport

142988

222346340

202

6

Beijing Capital International Airport

Shanghai Hongqiao Airport

142142

152802650

267

7

Osaka Itami Airport

Tokyo Haneda Airport

123198

49525596

210

8

Hong Kong International Airport

Shanghai PuDong Airport

84358

105869290

192

9

Chengdu Airport

Beijing Capital International Airport

78921

122169708

204

10

Beijing Capital International Airport

Guangzhou Baiyun Airport

78430

149409150

147

The largest domestic destinations from Tokyo Haneda are Sapporo Chitose and Fukuoaka, with over 300,000 weekly seats, and Okinawa, with over 132,000 weekly seats. The largest international markets at Seoul Gimpo, with slightly over 15,000 weekly seats, followed by Taipei Songshan with around 30,000 seats and Hong Kong with around 17,500 weekly seats.

Tokyo Haneda Airport top ten domestic routes (seats, 26-Sep-2011 to 02-Oct-2011)

Tokyo Haneda Airport top international ten routes (seats , 26-Sep-2011 to 02-Oct-2011)

North Asia’s Top 20 routes by seats (per week): 26-Sep-2011 vs 06-Mar-2012

Origin

Destination

Rank
- 26-Sep-2011

Rank
- 05-Mar-2011

Total Seat s
- 26-Sep-2011

Total seats
- 06-Mar-2011

Tokyo Haneda Airport

Sapporo Chitose

1

2

263,069

241,283

Jeju Airport

Seoul Gimpo

2

1

257,523

246,725

Fukuoka Airport

Tokyo Haneda

3

3

201,950

201,724

Hong Kong 

Taipei Taoyuan 

4

5

141,411

142,628

Beijing Capital 

Shanghai Hongqiao

5

4

140,164

143,070

Tokyo Haneda

Okinawa Naha

6

7

132,082

117,360

Osaka Itami

Tokyo Haneda

7

6

122,200

125,420

Hong Kong 

Shanghai Pudong

8

8

88,737

83,146

Chengdu Airport

Beijing Capital 

9

12

79,769

73,558

Beijing Capital 

Guangzhou Baiyun

10

13

75,718

68,411

Beijing Capital 

Shenzhen

11

10

72,040

76,938

Shenzhen Airport

Shanghai Hongqiao

12

11

70,562

76,110

Guangzhou Baiyun

Shanghai Hongqiao

13

9

70,090

78,422

Kagoshima Airport

Tokyo Haneda

14

14

69,100

67,814

Hong Kong 

Beijing Capital 

15

15

67,952

66,824

Beijing Capital 

Xian Airport

16

21

63,297

55,237

Busan Gimhae

Seoul Gimpo 

17

16

63,191

66,279

Tokyo Haneda

Kumamoto

18

17

61,000

63,036

Busan Gimhae

Jeju

19

18

58,920

62,614

Beijing Capital 

Hangzhou

20

19

58,260

59,171

Airlines serving Tokyo Haneda and destinations served from Haneda

Airline

Destination served from Tokyo Haneda

Air China

Beijing

Air Do

Asahikawa

Hakodate 

Memanbetsu 

Obihiro

Sapporo Chitose

AirAsia X

Kuala Lumpur

All Nippon Airways

Akita Airport

Asahikawa

Bangkok

Beijing

Fukuoka

Hachijo Jima

Hakodate 

Hiroshima

Hong Kong

Honolulu

Iwami

Kagoshima

Kita Kyushu Kokura

Kobe

Kochi

Komatsu

Kumamoto 

Kushiro

Los Angeles

Matsuyama

Memanbetsu

Miyake Jima 

Miyazaki

Monbetsu

Nagasaki

 Obihiro

Odate Noshiro

Oita

Okayama

Okinawa Naha

Osaka Itami

Osaka Kansai

Oshima

Saga

Sapporo Chitose

Seoul Gimpo

Shanghai Hongqiao

Shonai

Singapore Changi

Taipei Songshan

Takamatsu

Asiana Airlines

Seoul Gimpo

Seoul Incheon

British Airways

London Heathrow

Cathay Pacific

Hong Kong

China Airlines

Taipei Songshan

China Eastern Airlines

Shanghai Hongqiao

Delta Air Lines

Los Angeles

EVA Air

Taipei Songshan

Hawaiian Airlines

Honolulu

Japan Airlines

Akita

Amami O Shima

Aomori

Asahikawa

Bangkok Suvarnabhumi

Beijing

Fukuoka

Hakodate

Hiroshima

Hong Kong

Honolulu

Izumo

Kagoshima

Kita Kyushu

Kochi

Komatsu

Kumamoto

Kushiro

Matsuyama

Memanbetsu

Misawa

Miyazaki

Nagasaki

Obihiro

Oita

Okayama

Okinawa Naha

Osaka Itami

Osaka Kansai

Paris CDG

San Francisco

Sapporo Chitose

Seoul Gimpo

Shanghai Hongqiao

Shirahama

Singapore Changi

Taipei Songsha

Takamatsu

Tokushima

Japan Transocean Air

Ishigaki

Miyako Hirara

Okinawa Naha

Korean Air Lines

Seoul Gimpo

Seoul Incheon

Malaysia Airlines

Kota Kinabalu

Shanghai Airlines

Shanghai Hongqiao

Singapore Airlines

Singapore Changi

Skymark Airlines

Fukuoka

Kagoshima

Kita Kyushu

Kobe

Kumamoto

Okinawa Naha

Sapporo Chitose

Solaseed Air

Kagoshima Airport

Kumamoto

Miyazaki

Nagasaki

Oita

StarFlyer

Fukuoka Airport

Kita Kyushu Kokura

Osaka Kansai

Thai Airways

Bangkok Suvarnabhumi


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