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The end of the Bakugai boom?

With the boom in Chinese passengers at Japanese airports following the application of anti-corruption legislation came the phrase “Bakugai”, meaning explosive buying by Chinese tourists. However latest indications show this boom entering a downturn. CiR take a closer look.

From early 2015, driven by favourable exchange rates versus the ¥Yen and relaxations in visa regulations into Japan, Chinese passenger numbers to the country rose significantly. This trend continued into 2016 with average YoY growth between January and June 2016 of over 30%.

Despite Chinese passenger numbers continuing to grow each month, a dramatic slowdown in Chinese travellers has been seen in the second half of 2016, with October 2016 recording only a +1% rise versus 2015. It is no coincidence that this slowdown in Chinese travellers has coincided with the recovery of the ¥Yen.

Pinpointed as a major reason for the decline in Chinese traffic into Japan, the fall in exchange rates is not the sole reason for this decline. As CiR has reported previously, Chinese passengers are constantly looking for new, more varied destinations to travel to. This has led to a number of countries, both within and outside of Asia, witnessing a rise in the number of Chinese arrivals.

Fastest growing destinations for Chinese passengers from China (Int’l flights only)

So, as alternative destinations become more attractive to Chinese travellers, Japan looks to be the country feeling the impact most sorely. Latest seat capacity indicators show that this traffic slowdown into Japan looks set to continue with an expected -2% drop in scheduled international seats during HY1 2017, with February due to see a fall of -9% in seats due to the timing of Chinese New Year.

Despite the effects of the Bakugai boom beginning to fade, Japan remains a hugely important destination for Chinese travellers, and is still the second destination for international flights out of China.

PAX Source: CiR Business Lounge | Advanced Analytics Tool - Data based on Scheduled departing international passengers only. Data displayed for nationalities is based on residency through place of ticket purchase