Kazusei Kato: Competition Between Airports and Inbound Tourists

2022/11/11

Before the pandemic, Japan was bustling with inbound tourists. Why did so many foreigners come to our country in the first place? First, the reasons likely include the abundance of tourist destinations, cleanliness, high service quality, and low prices. Above all, the growing wealth of Asian countries played a major role. As incomes rose, more people began to travel.

A characteristic of the pre-pandemic era, aside from Haneda with its increased international flights, was the rise in arrivals at regional airports. As Narita Airport's share declined, the shares of airports outside the Tokyo metropolitan area, such as Kansai and Naha, grew. Furthermore, approximately 80% of inbound tourists were carried by foreign airlines, while the share of Japanese carriers like ANA and JAL was less than 20%.

The reality of attracting these flights is a bit more raw. Behind the scenes lies the "effort" of prefectural and airport officials. Recruiters attend overseas trade fairs to pitch their prefectures to foreign travel agencies and airlines. After these fairs, they negotiate individually to discuss terms known as "incentives." While details differ between scheduled and charter flights, these incentives vary from accommodation subsidies and discounts on airport fees (including landing fees) to support for tour development and airport bus operations. Foreign travel agencies and airlines are "shrewd negotiators," dealing with each prefecture individually to extract favorable terms.

Once a deal is struck, tourists flood the airport. However, as soon as the incentives stop, the tourists disappear. When the money stops, the relationship ends. Furthermore, the cost of these incentives has risen sharply. While it would be ideal for prefectures to cooperate in negotiations, inter-prefectural cooperation is easier said than done.

Why am I interested in this in the first place? There is a need to use transportation infrastructure wisely while maintaining it. In relation to this, my group is currently conducting research on the analysis of "neighboring effects." Our analysis reproduces the incentive competition among airports (excluding major ones), revealing that neighboring regional airports are competing with one another.

Incentives represent a transfer of money abroad and do not create jobs at that stage. While the policy is justified by the significant amount of money tourists spend, long-term perspectives and policy comparisons remain insufficient. I hear that some regions are moving toward creating frameworks to turn this into a cooperative game. I have high hopes for those developments.