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Vol.21 : Charles Duncan (Continental Airlines Japan)
July 18, 2007
Parties pull out all stops as zero hour approaches
Market convinced of August rate hike
E-money firms duke it out
Automakers envision vehicles of the future
Expanded coverage: Aquatic environments given fresh life
carrier：航空会社
Cancun：メキシコのユカタン半島先端にある保養地
connecting passenger：乗り換え客
niche：特定分野
（ C: Charles, P: Peter ）
| P : |
Where does Continental fly to, out of Tokyo or out of Japan? |
| C : |
We have a really interesting business, and I think a very unique network here. You know, unlike anyone else, we actually serve eight cities in Japan and we are very proud of that. You know, in fact no other U.S. or European carrier comes close, you know - most would fly to, you know 1, 2 maybe 3, you know the big three cities.
And you know, so for us we fly from Sapporo in the north and then Sendai, Niigata, Narita and then Nagoya. We don't serve Osaka, interestingly enough, but we do Nagoya and then Okayama, Hiroshima and Fukuoka are the eight. And so for all eight of those cities we fly to Guam, which is, you know, our Asia hub and base and you know Guam is a huge destination for the Japanese market. I tell people from the U.S. that it is sort of like Cancun to Americans. In many ways, it is the first international trip a Japanese person might take, you know, the nice hotels, the short flight, there is no time difference, people speak the language, it's safe.
You know, so essentially it is the first place you go and what we are trying to do from a marketing perspective is actually even broaden it up a bit further such that it may be your first trip, but then you can't change the geography and the convenience and so you can take your family as a professional and what-not and do - just, you know weekend, even two or three times a year.
So that's really our main business, and I should say that you know Guam is our hub, and, so beyond Guam we fly to a lot of destinations - we fly to Bali, Indonesia and Cairns, Australia and we fly to the Philippines and a lot of smaller islands in Micronesia, Palau, Pohnpei, Saipan, you know, various points.
And so we fly from these eight cities in Japan to Guam and then 70% or 80% of the people get off in Guam and again that's the main destination, we are also serving a lot of other points as well. And it's a lot of fun, you know, and for that business I end up traveling every week to one or two of those cities generally within Japan.
I quite enjoy that, just getting, you know the local foods and culture and customs, and there we have a great sales team that does great stuff in all those cities, and we get involved in the communities. And so I feel like we have really deep roots really throughout the country.
We have been here, this October is our 30th anniversary of service in Japan and when you look at the cities, you know, we have a long history. You know, it's 25 years next year in Nagoya, 20 years this year in Fukuoka, back in June we celebrated, and many of the cities are 17, 18 years, you know, a very, very long history throughout these markets and that's really kind of our core and our history.
Beyond that, 9 years ago in '98 which was also when I moved to Tokyo, at the same time we launched our Narita service to both New York and Houston, and so that's also become a very big business for us - Narita to Newark Liberty Airport in New Jersey, but very close to Manhattan and Houston and Houston.
Both of these are hub airports for us, and we have a lot of connecting passengers in Houston. Latin America, for example is very big. Mexico, we have 32 cities in Mexico, I believe, every Central American capital and most of the main cities in South America. So Buenos Aires and Lima, Sao Paulo and all these points, you know where Continental has really the best schedule in the market or one of the best.
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| P : |
That's interesting because I think a lot of people are probably not aware of that. |
| C : |
No, you are right, people who go tend to find out and one of our biggest challenges in the market is that, you know, we are not huge, we don't have limitless funds. And certainly the local Japanese carriers do have massive marketing budgets, and so you know they can plaster the city with billboards and trains and what-not, and so we tend to be very tactical and very careful in how we spend what limited funds we do have to get the word out.
And so what we - the things we do, for example, we've sponsored a tango dance competition that Japanese would attend, but you know that market will go to Buenos Aires, you know, and we have the dancers to do tango.
You know, and so we try to do very just, you know, shoestring types of things to be honest, but in all of our cities. You know, a good example in Niigata we are an official sponsor of the J-League Niigata Albirex team, and they actually every spring do their spring training camp in Guam, and so they train down there.
And it's, awareness is really the key everywhere, and so what we like to do is we - last year when the team was returning from Guam of course there are media on the airplane, there are media at the airport, and 'meet the team' is a really, really big deal in this little city.
And so we actually had Miss Guam and a whole team of musicians from Guam accompany the team, and so we actually got more media coverage from that. You know, in fact, we had our captain present flowers to make a ceremony at the gate when they left, with Miss Guam all the way back and then Miss Guam spent the whole weekend in Niigata, essentially just doing, shows in travel agencies, handing up leis, passing out flyers, doing media interviews.
And so it gets us airtime, you know, and publicity that we couldn't afford to buy quite frankly.
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| P : |
But do you find it has a direct effect on your sales? |
| C : |
Sure, you know, of course it's very difficult to measure directly. But absolutely, I mean, just little things like that, because again we just can't afford to buy the advertising on our own.
But we are willing to invest our time and our effort in our people, and we do things, you know, just very niche, very specific marketing-oriented programs in all of our cities as well and we really have, within the eight cities we serve, we think of this as 10 different marketplaces.
So, eight cities to Guam, and Narita service we also have to the U.S. mainland, and then Nagoya; we also fly to Honolulu and so within those we have 10 different very distinct markets, and we have a marketing plan for each one. And really I mean our competition is different in each city, and so we have to approach them differently.
But, you know, what's great about the business model, I like it so much, is that when you go to Sendai or you go to Hiroshima or these other points, we're the only airline that flies to a resort destination. There may only be two or three airlines that fly internationally and it would typically be to China or Korea or Taiwan, we're the only one flying to a beach.
And so we actually have really, really loyal customers there in those cities because they might fly to Guam this year, and then next year for vacation they go to Saipan or Palau or Bali or something and so we actually get them, you know, every time they go on vacation.
Which is really great fun and again if you are in Sendai, if you don't fly from your hometown airport (and we call ourselves the hometown airline), if you don't fly from one of these places your next best alternative would be Narita. But that is a 2-hour trip from Sendai to Narita and then an hour back, you know, to Tokyo Station, an hour from Tokyo Station to Narita and the cost of the rail would be 25,000 yen or so...
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| P : |
Plus you've got to wait. |
| C : |
And you can actually be in Guam in 3 hours. It is only a 3-hour flight.
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| C : |
And so to the extent that we can actually communicate that to people it's sold, you know, it's already done. But that really is a trick of just raising the awareness and marketing it in, by being in this business for a long time, that certainly helps, but it's just a lot of fun. You know, there is a long history; I've been here and I have just a great job, I enjoy it everyday, I am covering each city, and we are just in a very unique position in the marketplace.
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provincial cities：地方都市
short-haul flight：短距離飛行
percolate：浸透する
（ C: Charles, P: Peter ）
| P : |
It is interesting you get to travel to provincial cities in Japan as well because most people in the sort of job you're doing probably wouldn't have those...
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| P : |
...opportunities either. |
| C : |
Yeah, yeah, I feel good. |
| P : |
Most of your flights from Japan anyway, as you said, short haul, that is three and a half hour flights typically. So perhaps it is not the same as if you are traveling from Japan to the U.S. or to Europe, but for in-flight entertainment for example, if you have a lot of Japanese customers, do you, for example, select music channels or movies or whatever that the Japanese customers are going to prefer? |
| C : |
Absolutely, and it's very, very, very important for us, and even for short-haul flights we are very focused on that. I mean in fact for the short haul, just start there, you know, it's a three or three and half hour flight, but 90% to 98% of the passengers are Japanese.
And so even though we're a U.S. airline we really do focus on being Japanese in our service and in training both - I mean at every step of the way, at the airports, you know, on the Guam side focused on Japanese, you know, just cultural sensitivity and what the preferences are and, you know, newspapers.
In fact you know it's a similar flying time to domestic U.S. and if you look at the U.S. domestic market in particular they are taking everything off the airplane, it is almost like a Greyhound bus in a lot of ways but Continental is the only airline that has meals at mealtime, and we, you know, have free in-flight entertainment and we have pillows and blankets, I mean they are simple things but our competitors don't offer that stuff.
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| C : |
We do. And you know even on these short flights, from Japan to Guam, and again, it's a pillow, it's a blanket, it doesn't cost us a lot but I mean if you are looking and trying to save every single penny, you know, that's all been cut out since 9/11 at our competitors, but we still have it in place.
And so you know we are very, very focused on being high service and you know as comfortable as we can for the Japanese customer. But you know you are also right in the longer flights it's even more important, and we're doing a lot to localize and be as user-friendly for Japanese as we can.
I mean a few examples I can come up with for our 777 aircraft, which is really our flagship: we are putting in a new entertainment system, and we have 20 of those aircraft and two of them have it. And we are putting them in for the other 18 as quickly as we can - a new system that has 250 movie channels as well as, I think, 60 TV channels plus videogames and there's also a Berlitz Language Course.
And you can actually study a language, you know in your native tongue, sort of on a matrix. I think it is a 90-minute course to get just a basic, you know, touch-up on the destination where you are flying to. But the point is within that 250, what's really interesting and what is great is in the old system we had only 12 channels. And so you know we would have 8, perhaps 4 primarily in English, and we might dub the Japanese that's available and one or two channels for Japanese, and that will be about it.
But with 250 we will have, you know, and we do have a ton of content in Japanese, but then we also will throw in every other language you can think of, with one or two channels because there might be, you know, I don't know, like someone from Tel Aviv who speaks Hebrew and so we will have one or two channels in Hebrew, you know.
And any language you can imagine because we are such a global company and you never know where people are coming from, so you know. Thai, certainly Korean in this part of the world and again a lot of Latin Americans, so Spanish and Portuguese will be in there as well. So, we do that and then one other thing that is really, really great and we have gotten good feedback on is our kiosks at the airport where customers check in, the sort of computer box...
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| C : |
You know and in the U.S. all of our airports have it, we are bringing them out internationally in many, many places. For those boxes, they have only been in English up until now. But actually now we have just been putting in as quickly as we can multiple foreign languages, and we have 12 including Japanese.
And we get great, great feedback in that where they - you know for example, when you have a Honda engineer who is going to a plant in Alabama, and there is just no way in Birmingham, Alabama that the airport staff will speak Japanese, but that engineer who may not speak very good English can go to the kiosk and check himself in and view...
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| P : |
And there will be a button on the screen says "Nihongo"? |
| C : |
Actually, a flag, the Japanese flag. |
| C : |
And, so you try to just have - and make it as user-friendly as possible for all the languages so that we can actually take care of a person. So that even if we don't have staff on the airplane who speak Japanese, when you are flying from, you know, New York to Europe, you could still on the airplane have a movie in Japanese, help yourself at the airport when you check-in in Japanese, and not just Japanese, but Chinese and Hebrew and Portuguese and other language as well. So, we really are a very, very global company.
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| P : |
Presumably those kind of decisions are coming from the head office in Houston? |
| C : |
From our headquarters, absolutely. But really our international growth, we are the most international airline of the U.S. Carriers. We are almost 50/50 in revenue terms, U.S. domestic and international, and we actually serve more international cities than any other airline of the world I believe, and certainly among the U.S. carriers just international points on the globe.
And so we are very, very global and that has really been part of our strategy for the last 10 or 12 years, and so you're right, I mean, you know it has been planned from our headquarters, but within that because the Japan market is so important and really quite large for us, Japanese is going to prioritized and moved towards the top.
You know, Spanish would really the very first foreign language because especially in Texas and other points where we are strong, you know and we have a big network in Latin America, but generally the second language we do is Japanese as a company.
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| P : |
What about Nikkei Weekly? You've been here for fairly long. I presume you are acquainted with it? |
| C : |
Of course, I am. And I enjoy reading it a lot. I mean I must confess I don't read it quite every week, but I would say two or three times you know a month, so over half the issues I do pick up and read, and find it really, really interesting.
I mean, especially even when I was in business school in the US having recently left Japan. I then, every week went to the library to find it, because I just wanted to stay in touch with the country, and I think between the political analysis, business news from Japanese companies in particular, and even the new products and gadgets, that area I find really interesting, not so much as a consumer, but to know what ideas are percolating from the companies here and what markets are sort of being sought and pursued.
Because, yeah, I think a lot of innovation still, you know, comes from Japan, consumer demand is here, and, as well as the companies thinking of themselves. So I've been, about 10 years, a pretty regular reader of The Nikkei Weekly.
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 John Ermatinger / President
Gap Japan K.K. 
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