Hawaiian Airlines continues to struggle with Japan recovery due to weak yen

Hawaiian Airlines A330 in Sapporo
In the past, Hawaiian Airlines also used to serve Sapporo.

Hawaiian Airlines held its Q2 2024 earnings call on July 30, 2024. With Hawaii being a popular tourist destination for the Japanese and outbound international travel out of Japan being slow to recover, the topic has been touched upon a number of times during the call.

At the beginning of the call, the airline’s President and Chief Executive Officer Peter Ingram highlighted a number of things about Hawaiian Airline’s performance in the quarter. “Across our international routes, most notably in Japan, where the yen remains historically weak against the U.S. dollar, international point of sale remains below traditional levels,” he said.

“We’ve backfilled some of this missing Japan point of sale demand by proactively intensifying our focus on U.S. and other international points of sale,” he continued.

Hawaiian Airlines’ Chief Revenue Officer Brent Overbeek said “The yen exchange rate remains the biggest headwind in this market, though we continue to see strong affinity among Japanese consumers for Hawaii and for our brand.” He also mentioned that high accommodation costs in Hawaii are another reason behind the lagging recovery of demand from Japan.

When asked to provide more details about the airline’s international markets by Susquehanna analyst Chris Stathoulopoulos, Ingram said “We saw different recoveries over the last couple of years with Japan, which traditionally been our largest being the last to recover and the one that so far has had candidly the shallowest recovery.”

“While we’ve seen deterioration in the Australian dollar and the New Zealand dollar, it hasn’t been to the same extent that the yen has depreciated,” he continued.

According to Ingram, the weak demand from Japan “pushed us to put more focus on U.S. and other Asia point of sale over Japan.” “That is traffic that we really haven’t had to go looking for before because there was such deep and strong demand in from Japan point of sale, but that filled the vast majority of our airplanes,” he said.

For over two years now, the Japanese yen has been hovering at between approximately 130 to 150 yen per US dollar, as opposed to the approximately 110 yen per US dollar before that. While that helped stimulate inbound travel to Japan, it also created a significant barrier for the recovery of international travel out of Japan.

As a result, Hawaiian Airlines has been unable to recover its Japan routes to pre-COVID-19 levels so far. The airline gave up one of its daily Tokyo Haneda slots earlier this year and postponed plans to increase frequencies on some of its existing routes to the country.

Hawaiian Airlines’ Japan network includes flights from Honolulu to both Tokyo Haneda and Narita, Osaka Kansai, and Fukuoka.

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