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Rising airfares curb Guam's ability to compete with Asian destinations

GVB seeks to break United's monopoly, eyes more airlines

Tourists arrived at Guam International Airport on April 30, 2024. Photo by Mar-Vic Cagurangan

By Mar-Vic Cagurangan


Despite spending $8.8 million in marketing campaigns, the Guam Visitors Bureau continues to face headwinds that stunt its initiatives to recover the pre-Covid arrival numbers.


Based on first-quarter trends, GVB's visitor arrivals forecast for 2024 was estimated at 900,000, or 55.6 percent of the pre-pandemic level. 


However, the guarded expectation is being blown by the rising airfare resulting from United Airlines’ “near monopoly” on the Guam-Japan market, compounded by the steadily falling yen.

Historically, Japan has been Guam's top source market but it has been dislodged by Korea. Economists said the yen has lost about a third of its value since the start of 2021, making it more difficult for Guam to regain Japan's pre-pandemic status.

While the yen is expected to stabilize over time, GVB noted that “the high cost of airfares will remain a significant factor” considering that United dominates the market for travel between Japan and Guam.

“Although JAL flies to NRT, UA has a near monopoly on this market,” GVB stated in a management report filed with Ernst & Young. “The game changer will be the launch of new airlines, including LCCs.”

United offers direct service to Guam from five airports in Japan: Tokyo/Haneda, Tokyo/Narita, Osaka, Fukuoka and Nagoya.

GVB disclosed its plan to approach airlines in Japan, Korea, Southeast Asia, the United States and Hawaii “to strengthen Guam's aviation strategy.”

As it stands, Guam is facing tough competition with its own core markets such as Japan and Korea, which both offer lower airfares.


“Weakening currencies relative to the U.S. dollar play  a dominant role for core

 markets when deciding which destination is most beneficial for travel," GVB said.

Last year, 2 million Koreans traveled to Japan buoyed by a strong won-yen

exchange rate. Tourism officials anticipate the trend to linger in the months ahead.


In November 2023, the Japan Tourism Authority revealed Japan's strong inbound travel matching pre-Covid volume. Asian travelers shifted to Japan last year when it opened the country to receive tourism after three years of border closure.

GVB noted that Guam is increasingly disadvantaged by the scale and cost of

 travel when competing with Asian destinations that have larger populations and lower costs in their destination value chain.

 “Guam must compete with this and therefore needs to elevate its marketing efforts and continue to work to deliver the promise to assure a culturally-centric destination offering amazing experiences,” GVB said.

While Japanese, generally, are still reluctant to travel, GVB said its marketing campaigns "have resulted in 97,823 Japanese visitor arrivals, a 651.2 percent increase from the previous fiscal year. Japanese visitors comprised 13 percent of total visitor arrivals in Guam for FY2023."

Korea is the largest market in recovery with around 70 percent of 2019 levels recaptured in 2024. Tourism officials anticipate this trend to continue throughout the year.

Japan and Taiwan are expected to lag with only 30 percent and 11 percent recovery, respectively.

"Seat capacity to Guam for FY2024 is recorded at 1.5 million seats from all 

markets. This represents only 68 percent of the total seats to the island in 2019," GVB said. "Total arrivals anticipate a load factor across all markets of around 59 percent of available seats to the island."


Meanwhile, the Office of Public Accountability reported that GVB's total revenues increased by $6.1 million, from $21.5 million in fiscal 2022 to $27.6 million in fiscal 2023.

The increase was attributed to a significant increase of $12.2 million in non-operating revenues from the government of Guam appropriations,

In fiscal 2023, GVB received a total of $26.7 million in GovGuam appropriations, consisting of $5.8 million received from the general fund, $13.1 million from the Tourist Attraction Fund normal appropriations plus $7.8 million in excess appropriations.

"The increased appropriation reflects the improvement in tourism arrivals, a driver of the financial viability of GVB and TAF. As of Sept. 30, 2023, GVB has receivables due from GovGuam amounting to $4 million associated with the FY 2023 appropriations," the OPA said.

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