TOKYO -- Japanese travel agency JTB will greatly expand its European charter flight offerings in the year ending March 2017, looking to recapture demand for profitable tour packages that was lost amid terrorism concerns and economic headwinds.
JTB will use 17 charter aircraft, more than triple the fiscal 2015 level, to serve routes with no current direct flights. That would make tours more convenient for regions encompassing, for example, Berlin and sites in Poland. Cutting travel times will allow guests to stay longer at each destination.
More than 10% of customers purchasing JTB's retail overseas tour packages travel to Europe. The agency aims to grow traffic on tours there by 30% to 157,000 people in fiscal 2016, using more charter flights to up its offerings' appeal to travel-hungry seniors and other key demographics.
European tours are a source of easy earnings for travel companies, which typically operate with around a 10% profit margin. An eight-day European tour running 300,000 yen to 400,000 yen ($2,638 to $3,518) would thus yield between 30,000 and 40,000 yen, making it worth a good deal more than a 100,000-yen, five-day Thai package.
JTB's competitors are targeting travelers to Europe as well. The Nippon Travel Agency has cut prices on its packages there, anticipating that falling oil prices will push major airlines to eliminate their fuel surcharges starting in April, as well as savings from an end to the weakening yen. H.I.S., meanwhile, is cooperating with French hotels, airlines and other companies eager to pull in Japanese customers to offer discounts on luxury tours in that country.
Others are cutting costs associated with escorted tours by creating larger travel groups. In April, KNT-CT Holdings will combine guided tours offered by subsidiaries Kinki Nippon Tourist and Club Tourism International to grow profitability.
Leading travel companies' overseas billings have been slipping since fiscal 2013, due to a weakening yen and other factors. Last November's terrorist bombings in Paris sent business in December tumbling 13.6% below the year-earlier level.
Domestic travelers increased 2.5% in 2015, while customers headed abroad fell 4.4%, JTB reports. Companies are scrambling to rebuild their profitable overseas operations before business at home fades.