Hawaiian Airlines Braces for Slow Return of Japanese Travelers

25.08.2023 - 14:13 / skift.com / Hawaiian Airlines / Sherry Sun / Peter Ingram / Airlines

Hawaiian Airlines reported a net loss of $240 million for all of 2022 on Tuesday, largely attributed to a slower than previously expected return of Japanese travelers and competition for inter-island service between the eight major Hawaiian islands.

The Honolulu airline saw a robust return in travel to Hawaii from North America and international markets excluding Japan, as well as strong support from premium and ancillary products’ performance. Compared to pre-pandemic levels, U.S. mainland to Hawaii total passenger revenue was up 29 percent on 9 percent more capacity. 

Japan has historically been a major market for Hawaiian Airlines, which offered daily flights to each of Tokyo, Osaka, Sapporo and Fukuoka before the pandemic. In 2019, Hawaiian attempted to create a joint venture and code-share agreement with Japan Airlines by filing an application with the U.S. Department of Transportation (DOT) and Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) to seek antitrust immunity. While the country recently reopened for international travel, its tourists are not flooding back to Hawaii.

It is unclear when Hawaiian Airlines expects Japanese travelers to return to the islands and re-embrace international travel. The Japanese government has been promoting domestic tourism with incentive programs as an economic stimulus. Depreciation of the yen against the dollar is also impacting the spending power of these travelers when they consider U.S. destinations.

“Japan was one of the more conservative places in the world in terms of dealing with the pandemic and maintaining a fairly high level of caution,” said the airline’s CEO Peter Ingram. “The general sentiment toward travel and comfort is going to be a gradual thing.”

In line with expectations, Hawaiian’s earnings reports showed increased wage rates and airport rent lifted fourth-quarter unit costs by 14.2 percent compared to pre-pandemic levels. The company increased their order of Boeing 787s at the beginning of 2023 to add two more aircrafts to the deal, hoping to provide more flexibility when four A330 leases expire in 2024. Finalization of the deal’s delivery schedule brings the expected 2023 aircraft capital expenditure to be between $290 million to $300 million.

Construction on a primary arrivals runway and constrained arrivals from traffic control programs into its Honolulu hub has affected on-time performance in the past quarter. As a response, the airline added more block time in scheduling and created recovery buffers for flights. It reports being more susceptible than usual to weather-related mechanical disruptions, as the construction period and constraint on arrivals traffic will likely continue into the second quarter of