The uptick in travel has bolstered ANA’s bottom line, with operating profit exceeding estimates for the fiscal first quarter through June. Image Credit: Bloomberg

Tokyo: There aren’t any signs that the release of treated wastewater from the damaged Fukushima nuclear plant will dissuade Chinese tourists from visiting Japan, despite a backlash in Asia’s biggest economy, the CEO of Japan’s largest airline said.

Although he’s keeping a close eye on travelers’ movements, Koji Shibata of ANA Holdings said in an interview that “there is no significant impact” thus far. The number of inbound visitors from China was about 300,000 in July, he said, compared with 30,000 in January.

China lifted a ban on group tours last month, fueling predictions of a boost in retail sales in the island nation. Before the pandemic, Chinese tourists were big spenders at Japan’s drugstores, electronics retailers and high-end department stores - which received them by the busload.

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“We believe this steady and consistent increase to continue in the future,” Shibata said at the company’s airline training facility near Haneda Airport.

For now, the release of wastewater from the Fukushima plant, which was damaged by a tsunami triggered by the 2011 earthquake in Japan, appears to have had a minor impact in travel bookings from China. There’s a 7 per cent decline in November 2023-March 2024 seat filings as of August 29 compared with August 18, according to data from Cirium.

ANA used to fly 175 roundtrip flights per week between Japan and China before the pandemic, and currently plans to fly 76 such flights weekly during the winter season, or 43 per cent of prior capacity. Shibata said ANA will “increase the number of flights to respond to a further rise in demand.”

Japan has also become an important transit point for travelers from Southeast Asia and China seeking to reach North America because of the limited number of direct flights between the US and China, according to Shibata. That’s a change from when Japan was mainly an inbound destination and source of outbound travelers.

“Because there is demand on the US and China routes, we are responding to that,” Shibata said.

Separately, ANA’s CEO said that so far, an issue involving faulty engines by Pratt & Whitney isn’t disrupting operations. The manufacturer said earlier this year that it will need to remove 1,200 geared turbofan units from Airbus SE planes for inspection after finding a possible fault.

About 10 per cent of ANA’s some 280 aircraft have those engines, but the carrier is resorting to methods such as “purchasing spare engines and adjusting the aircraft maintenance schedule,” with no major impact on capacity, Shibata said. It’s “affecting not just us, but all over the world,” he added.

The uptick in travel has bolstered ANA’s bottom line, with operating profit exceeding estimates for the fiscal first quarter through June. Cost cuts also helped the carrier’s profit margin reach a record 9.5 per cent, Shibata said. While passengers yields, or the number of miles traveled by paying travelers, may dip in the second half, ANA’s “operating profit margin will stay at a high level, although it may not be as much as 9.5 per cent,” Shibata said.

“We will do even better from now on a rise in the company’s revenue,” Shibata said, adding that the extension of a gasoline and fuel subsidy by Japan’s government until year-end was positive for ANA.