Delta credits weak yen with boom in demand for flights to Japan

Delta Air Lines Inc. is seeing a surge in demand for flights to Japan as the yen’s fall against the dollar has led more travelers to flock to a suddenly much-cheaper Asian destination. 

“We have really record numbers of US tourists heading to Japan,” Delta President Glen Hauenstein said on a conference call Thursday to detail second-quarter financial results. The recent upswing in leisure adds to the recovery in US-Japan business travel since the end of the pandemic, he said.

The yen has languished in recent weeks near its lowest levels against the dollar since 1986, and has been the worst performer against the greenback this year among major currencies. The slump is mainly caused by Japanese interest rates that are much lower than those in the US and elsewhere. It’s spurring tourism by boosting the buying power of inbound travelers. 

“What we’ve seen is really a new Japan as a destination market,” Hauenstein said, noting that years of yen strength had made it too expensive for many American tourists to afford vacations in the country. “It’s a very different world for US travelers, and they seem to be taking great advantage of that.”

Asia-Pacific markets have joined Europe in attracting leisure passengers beyond the traditional end of summer travel after August, extending leisure trips through November, he said.

“Pacific margins are sustaining at a meaningfully higher level than pre-pandemic,” he told analysts on the call. 

China remains a weak spot, however. Delta has shifted much of its former flying between the US and China to other parts of the Pacific rim, including Korea, Australia and New Zealand, after demand failed to rebuild after the pandemic, Chief Executive Officer Ed Bastian said in an interview. 

“I do not anticipate the Chinese market returning to its prior level of service anytime soon,” he said. “US demand for China is not very strong.” 

American Airlines Group Inc. declined to comment on Japan travel demand, and United Airlines Holdings Inc. didn’t immediately respond to a request for comment.