LCCs can reverse Japan-Hong Kong tourism decline, and grow Hong Kong visitors to Japan

The Hong Kong-Japan market will be 16% larger in Mar-2015 than a year prior. The market had experienced relatively flat performance earlier this decade, but a series of factors is changing the market. Japanese tourists to Hong Kong long outnumbered Hong Kong visitors to Japan, but the weakening yen is allowing Hong Kong visitors to Japan catch up to Japanese visitors to Hong Kong. The Hong Kong to Japan market has a leisure orientation, and fares are often lower than those ex-Japan. Growing LCCs can help meet Hong Kong demand and rejuvenate the Japanese market. LCCs are projected to comprise 19% of the Japan-Hong Kong in Mar-2015.

LCC penetration will reach 20% on the largest route between the two, Hong Kong-Tokyo, as Part 1 of this report outlined. This second part looks at the LCC presence in other Japanese markets, growth prospects and challenges. For Hong Kong-Fukuoka, 42% of seats will be provided by LCCs, while for Hong Kong-Osaka 30% of seats provided by LCCs. These are only a few routes and still modest shares compared to other regions, but growth opportunities may be capped by constrained slot availability.