On any given day at the Guam Airport, one can see a large number of tourists wrapping up their holiday on the island. Located in the western Pacific, the tourism industry is a primary driver to the economy of the island - a US territory home to 150,000 people. Mixed in among the departing passengers waiting for their flights in the pre-departure area are Guamanians who are “going off-island.” From visiting friends and relatives, traveling for work or business, or to seek medical treatment, air travel is the primary way to access the rest of the world.
While most news publications feature content discussing the island’s tourism industry, not much has been written about the cost and the trends that plays into travel planning for Guam residents. As the aviation industry continues to grow and evolve in Asia, some changes will affect how Guamanians make plans for their next trip off-island. This study will deal with the economics of airfares and the travel options for Guamanians planning for their next trip off-island.
Airfare Collection/Study Method
The destinations included on this study are based on direct flight routes which accounts for non-stop flights out from Guam. There are a few exemptions such as United’s four-times weekly “island-hopper” from Guam to Honolulu which makes five stops along the way - Chuuk, Pohnpei, Kosrae, Kwajalein, and Majuro – while keeping flight number. To keep it strictly direct flights, the study does not include travel involving connections on another flight after the initial departure from Guam.
The airfare data was collected using a combination of an automatic search program and manual searches of airline and booking sites during a collection period took place between mid-September to mid-October for travel with departures in October. These departure and return date combinations also include some itineraries with return dates occurring after the end of the month. This study will account for airfares that can be booked on airline and travel websites or apps from Guam that will have most airlines serving the island represented. There will be some airlines left out such as Air Busan and Star Marianas, which Guam residents can’t book travel on, or do not have search and booking options on their website.
This initial study is not scientific, but to provide insights using a snapshot of airfare data during a given time period and does not account for extra fees such as baggage allowance or meals on low cost carriers. Using the combined automated and manual search method, over 1045 roundtrip Economy class base airfares were collected - including the lowest and most expensive options. While most travelers will seek these lowest possible airfares, the study takes into account most expensive Economy Class tickets that a traveler could choose from.
Guam Air Travel Route Network in 2018
As of October 2018, the current number of weekly scheduled departures out of Guam is around 207 flights operated by 11 airlines to 20 destinations in Asia, Micronesia, and Hawaii with United Airlines serving the most flights from Guam. Along with being the source of the majority of tourists coming to the island, over 73% of the flight departures from Guam are to cities in South Korea and Japan. South Korea has the most flights to the island, with 86 flights per week followed by Japan with 66. The large number of weekly flights to/from Japan and South Korea are followed by the Philippines (18), Hawaii (11), and Saipan (9).
While there are multiple daily flights to Japan and South Korea, some destinations may have one flight per day or depart a few days per week. Examples of these routes are to Hong Kong and Micronesia, which see flights by United four or five times weekly. United also has the daily non-stop service from Guam to Honolulu – the only US airline serving flights between the island to a US state. However, United doesn’t have any flights to Taipei or to Korea which are served by China Airlines and the Korean-based carriers.
Based on over 1000 roundtrip airfare itineraries collected, the cheapest airfares were found on trips to Saipan where you can consistently get roundtrip airfares for around $214-250. During the airfare collection period, the average airfare was much higher at around $469.20, which accounts for much more expensive options connecting that involve a connection in Japan that travelers will shun. The most expensive destination is Majuro in the Marshall Islands ($2069.44) followed by Honolulu ($2069) and Palau (USD $1547.60). Most airfares for roundtrip tickets to most destinations from Guam is between USD $500-$1000.
For each dollar a Guamanian traveler spends on a roundtrip airline ticket, the 136 mile trip to Saipan has highest Average Cost Per Mile (CPM) of around $3.45. Following Saipan are Palau ($1.92) and Yap ($1.36). On the other side, Fukuoka had the best Average CPM of $0.43, followed by Busan, Osaka and Tokyo ($0.45).
When comparing airlines, Philippine low cost carrier Cebu Pacific had the lowest Average CPM at around $0.19, followed by Korean low cost carriers Jeju Air ($0.22), T’Way (0.25), and Jin Air ($0.36). Philippine Airlines has the best CPM of the full-service carriers serving Guam at around $0.40 while United has the highest Average CPM for airlines serving Guam at $0.79. United’s CPM could be attributed to the airline’s services to the Micronesian islands and Saipan that have the highest airfare CPM in the study.
Key Airfare Observations
United has a firm grip on flights to Micronesia and Hawaii, as the other US based carriers such as American or Delta have not started their own flights between Guam and Honolulu. It can be difficult to justify another route, as travelers from Guam to Hawaii or the US have the options to connect via Honolulu or Japan, or take the island hopper route. The fares collected on those routes can be booked for around $1200-$1400. With a difference of a few hundred dollars, one could choose to spend a close amount and get more airline mileage points connecting through Japan versus Honolulu.
Another key observation is with travel from Guam to Korea. Low cost carriers such as Jeju Air, T’Way, and Jeju Air offer roundtrip airfares to Seoul or Busan for less than $400. Most airfares from the Korean low cost carriers can be found in the $300s/low $400s, with some fares to Busan going lower for around $276. These fares can be $200-$400 cheaper than airfares from Korean Air with their fares to Seoul and Busan found at around $600s.
In addition to offering low cost airfares to Korea, Jeju Air and T’Way also offer decent fares to Osaka, Japan. Both airlines offer roundtrip fares from Guam to Osaka for around the $400s and low $500s. For the same route, United’s fares were $100-$200 higher at around $660-$811.
The other market seeing the low cost carrier effect is travel from Guam to the Philippines. Cebu Pacific leads the way in the lowest roundtrip airfares with a cost of less than $400. United and Philippine Airlines offers fares in the low $400s, with the additional benefits of baggage allowance and meals included. Depending on the season and time of booking, it is possible to get airfares on the Guam-Manila route on any of the three airlines serving the route for less than $300.
Philippine Airlines also provides attractive airfares for travel to Japan and other destinations in Asia with a connection in Manila. On flights to Japan, the usual airfares for non-stop flights with Japan Airlines or United was around the $600s, while there were itineraries found with Philippine Airlines for trips to Tokyo, Nagoya, Osaka, and Fukuoka for around $540. On flights to Taipei, Philippine Airlines had fares at around $460 – around $100 less than the lowest airfares with China Airlines. Beyond the routes covered in the study, it could be worth considering Philippine Airlines for travel from Guam to Southeast Asia and Australia.
What to Watch For
The biggest impact Asian low cost have made on the aviation and travel landscape for Guam is on flights to Korea and Japan. Korean LCCs could open up more flights to accommodate the growth of Korean visitors to Guam from cities outside of Seoul or Busan. What should be interesting is the challenge they will put to United and Japan Airlines as they pick up the slack after the departure of Delta on the Guam-Japan market. Starting on October 28, Jeju Air will be the first low cost carrier to offer flights from Tokyo to Guam. For Guamanians looking to visit or do business in Japan, there could be cheaper airfare options to choose from starting for the winter and into 2019.
While low cost carriers continue to challenge United directly on routes to key markets, other Asian carriers could follow Philippine Airlines’ lead in offering competitive fares for travel to Japan, Hong Kong, and Taipei from Guam. Cebu Pacific could step up its marketing for connecting options to Southeast Asia and Australia, and possibly to Japan and Korea. Another airline that could offer connections at their hub with attractive airfares is China Airlines.
As airlines consider the business aspect of their services, travelers from Guam should take note of a potential rise in airfares to some destinations in 2019. Among the destinations where airfares will rise are the Philippines and Hong Kong. The Philippine Civil Aviation Board in September approved the request by local airlines to impose fuel surcharges – fees passed on the travelers to offset rising global fuel costs. Hong Kong’s government has made a similar move, ending a ban on fuel surcharges in place since 2016. As part of Hong Kong’s government policy, airlines will also be able to impose additional charges provided that they are disclosed before a traveler chooses to book the trip.
Low cost carriers have changed the landscape of the aviation industry globally. While it continues to maintain its strong route network from Guam, some of the foreign airlines on Guam are adding new challenges to United’s presence on key markets such as the Philippines, Japan, and Korea. These airlines may not necessarily need to add more flights, but could offer their own brand of customer service and attractive airfares that could attract travelers from Guam to try flying with them for the next trip off-island.