Counting the cost of oil

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Martin Moodie
Martin Moodie is the Founder & Chairman of The Moodie Report.

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This months’ news from Japan regarding fuel surcharges is bad news on every level for travel retail.

In a nutshell, the price of outbound travel from Japan – such a linch pin of the global travel retail channel – is going up… and up.

Airfares on the key Pacific routes, embracing major travel retail heartlands such as Hawaii, Guam, Saipan and the US and Canadian west coast, will see airfares increase by +13% from April 2008 as a direct consequence of the rising price of fuel. Fares on Latin American routes will rise by +10%.

Ouch. Just as the rate of the Yen was looking distinctly favourable to travel retailers such as DFS in Hawaii, yet another external factor looks set to bite the business.

The Japan Association of Travel Agents (JATA) is urging airlines to review the charges every six months rather than every three – and to unify that revision cycle on an industry-wide basis.

The association is well aware of the damage that is being created by erratic implementation of the surcharges, which is eroding consumer confidence and prompting many to opt for shorter-haul destinations.

The last 40 years tell us how much we need the Japanese travelling. It’s to be hoped that not only do rising prices come under control but that the airline industry manages to persuade consumers that the problem is being managed in a considered rather than knee-jerk fashion.

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