Sunday, September 23, 2007

609- ASIANA AIR / MVA

MVA SAYS LACK OF SEATS CAUSING SAIPAN TOURIST SLUMP
Well I have always disagreed with that theory. You see the amount of seats don't make the difference, its the people in them that counts. I believe the reason JAL pulled out was because people stopped wanting to come here. I have said this over and over again in previous posts. Now Asiana is flying here and this is their results... Read about it here... Asiana News Story <-- click this Some of the story in part..THE commonwealth has been a losing venture for Asiana Airlines since it began operations here. This was disclosed by its general manager Kwang Joong Kim to the board of the Commonwealth Ports Authority during a special meeting on Thursday. “For the past 15 years Asiana has been losing money in the CNMI…believe it or not,” he said, adding that the airline has launched new daytime flights and started new ventures on island to prevent its airline service from “collapsing.”
The MVA would like to put the blame of their inefficient operation on the airlines, a typical CNMI ruse of blaming everyone else without looking inward at the real problem. I think Asiana is making a gallant effort to support the tourism industry here , which MVA likes to takes credit for. Just how many airlines do they want to go bust flying here, with empty seats while doing nothing to improve this stagnate tourist attractions or finding new ones to draw the people here.
Tell me just what has the MVA done to improve Saipans tourist industry, the attractions and places they may visit? They got a Saipanda, proposed art gallery's in the blacked-out airport, left tourist on a plane 3 long hours on the tarmac, I can't think of any good things I've heard about them... Oh WTF do I care? No one else seems to give a shit either. In conclusion..If anyone gave a shit they would do more then sing the "Why Aren't They Coming blues." That's all...
.....GED.....

6 comments:

Jonas Ogren said...

Glen... enjoy reading your blog my friend...

You can't buy something that is not available to be bought... so in some ways there is a certain truth to the statement 'we need more seats'.

Having said that... you're correct about the airlines... it's not about the seats... it's about the butts in the seats... or demand as we call it in the industry. Demand seldom comes as a result of supply. The reverse, however, is true... supply comes as a result of demand. If people wanted to visit Saipan, and were willing to pay a reasonable price to do so, the airlines would fly... and make money. So the problem is not trying to get the airlines to fly... but trying to get the people to want to come... at the right price.

The problem with Saipan is that it is considered (by the whole tourism industry) to be a low cost, low end destination... it is not considered 'exotic' or 'luxurious' by its main markets - Japan and Korea... instead it's 'familiar', 'common', 'easy', and 'simple'... and often marketed as such. People don't really want to pay alot of money for that type of product... and demand for Saipan has become price driven to a large extent.

As agents and tour operators view Saipan as a price driven destination they will market it as such... resulting in low rates... attracting low rate kind of people - no business class... no suites... etc etc. Once all the middle men have taken their cut... the yield per passenger is so low that the airline has to fly the plane close to full just to break even! And we're talking about full service airlines here... with very high cost structures compared to the much more competitive low cost airlines like tiger, jet star etc.
The way things are now, Saipan is a low cost destination... and needs low cost airlines. Or, it needs to become a better destination, with more high end product, and then be able to sustain and support carriers like Asiana and JAL.

Businesses are businesses and there to make money... it's just that the airlines are not fixed to a given location. If the hotels on Saipan could pick up their buildings and pools and move them to a booming market like Phuket or Bali... I am pretty sure some of them would leave too!!

Anyway... it's not an easy problem to solve and one that will take considerable investment. Everyone is really in the same boat and it's something that all the stakeholders will have to fix together. For the most part, I think all the pieces are there... the CNMI (tinian and rota definitely included) is a beautiful place and has alot going for it... it just needs a strong, knowlegable, intelligent, and committed captain to get the boat on the right course...


All the best!

glend558 said...

Jonas: Good to hear from you...You surely got it pegged. They should have you back here again, but I know you wouldn't want to do that. Drop me an e-mail and get me up to speed. Later...

Jeff said...

Guam is similarly low cost, low end and not exotic, but there's no shortage of asses in the seats heading over there.

Jonas Ogren said...

Correct Jeff...
Guam is doing much better... but Guam is not the same as Saipan. It has alot more going for it... from an economic and certainly from an airline standpoint...

Guam has a business community... it is the economic hub of all of the micronesian islands. It also has the military, and a much larger population to support that economy. In short, there are more reasons for more people to travel to Guam (I am not talking only about people who want a tropical vacation here... in that case Saipan is probably a better choice) Guam brings business travel and cargo to a much greater extent than on Saipan... further enhancing the proposition to an airline from a revenue standpoint.

From an airline perspective, Guam is also a hub... with a very different dynamic than Saipan. Quite a high percentage of the passenger load on planes arriving to Guam continue on to other destinations... Bali, Australia, Philippines, Hawaii etc etc... and even Saipan. A plane that goes to/from Guam can be filled up with passengers to/from all those destinations... a much easier job than filling it up with people who only want to go to the CNMI or only Guam.

So from an airline perspective it makes a hell of a lot more sense to fly Tokyo-Guam than Tokyo-Saipan... it is the business reality of the situation. Not to mention the type of money they can make by scheduling that same plane to fly to Tokyo - Seoul, or Tokyo - Shanghai... with business class full and the belly full of high paying cargo!

Until such time that it makes more financial sense for an airline to fly to Saipan, they will put their planes elsewhere...

One way to ensure seats is for the government so subsidize the airlines... like they did in the late 80's with the 727's flying Guam-Rota-Saipan. But that is a simple, expensive, and temporary fix that will not ensure butts in those seats... and will certainly not affect demand for Saipan.

Demand is really the root of the problem. Demand for Saipan is not what it used to be and that is what needs to be addressed. Find out why, and fix it... create a product that people want. Trust me, if people want to come, the airlines will fly. It might take a bit of a nudge to get them started... discounted landing fees / marketing money etc etc... but once there is solid demand, they will fly.

SteeleOnSaipan said...

Jonas Ogren, all the best clubs closed after you left! Reports were that the lost revenue was just too much to overcome. Where are you nowadays? RS

Jonas said...

Singapore my friend... Singapore... fantastic city to live in - you would love it!