How New Type Influenza affects Travel Contracts in Japan

Masaru Sasaki

Legal Counsel, International Legal Affairs, JTB Corp.

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Who is JTB? Established in 1912

Largest travel company in Japan, 6th worldwide

More than 700 travel shops in Japan, and nearly 100 overseas offices (red dots)

Annual group turnover is US$ 13 billion in 2008

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Why taking up New Type Influenza

First pandemic in nearly 80 years SARS was a regional epidemic not pandemic Unpredictable! Huge GNP loss of nearly US$2,200bn to

the world tourism economy (WHO estimates)　　　　　　　　　　　　　　↓　　 Valuable lessons for travel industry !!

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Table of Contents Tourist and travel company on travel

contract. How new type influenza affected tourist

behaviors in Japan How to cope with global threat affecting

travel across the globe

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TIME

PREDOMINANTLY ANIMAL INFECTIONS; FEW HUMAN INFECTIONS

SUSTAINED HUMAN TO HUMAN TRANSMISSION

WIDESPREAD HUMAN INSPECTION

POSSIBILITY OF RECURRENT EVENTS

DISEASE ACTIVITY AT SEASONABLE LEVELS

PHASES 1 - 3

PHASE 4

PHASES

5 – 6

PANDEMICPOST

PEAK POST

PANDEMIC

PANDEMIC INFLUENZA PHASES BY WHO

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Sequent Events from April to July, 2009

April Report of outbreak of swine influenza in Mexico started.

Apr26 JTB decided to discontinue selling package tours to Mexico.

Apr28 WHO raised its alert level to Phase 4.

Apr30 WHO raised its alert level to Phase 5.

May 7 WHO announcement (see page 8)

Mid.May A sudden outbreak of flu reported in Hyogo Area, Japan.

May22 Mexico announced that flu was almost over in Mexico.

May27 Australian government announced its intention to refuse

entry of students tours from Japan. (resumed on Jul 14)

May29 JTB resumed selling package tours to Mexico.

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Sequent Events from April to July, 2009

Jun12 WHO raised its alert level to Phase 6.

Jul01 China announced all foreign students coming to China to

meet with Chinese students should be kept at airport

hotel for seven days for health check.

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WHO announcementon 7 May 2009 (originally posted on 1 May 2009)

WHO is not recommending travel restrictions related to the outbreak of the influenza A(H1N1) virus. Today global travel is commonplace and large numbers of people move around the world for business and leisure.

Limiting travel and imposing travel restrictions would have very little effect on stopping the virus from spreading, but would be highly disruptive to the global community.

We do not believe entry and exit screenings would work to reduce the spread of the disease.

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Tourist and Travel company on travel contract (1)

Five major responsibilities of travel company for organizing package tours in Japan

(1) complete all travel arrangements specified in tour itinerary (2) manage and confirm all travel arrangement is provided per c

ontract document and if any change is obliged to happen, try to provide as similar services as possible.

(3) confirmation of safety (4) if guaranteed services fail to provide, pay compensation in ac

cordance with contract (5) pay fixed solatium for accident/death and/or loss of baggage r

egardless of error or negligence on Company side

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Tourist and Travel company on travel contract (2)

How travel company in Japan confirms safety of overseas destination

(1) Travel Alert issued by the Ministry of Foreign Affairs (similar to travel alert by U.S.Department of State)

(2) Information gathered through overseas representatives/local agents

(3) Other public information

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In most cases

Insurgence

Ministry of Foreign Affairs issues Travel Alert

Travel company discontinues making/selling tours to those area

Influenza case

No warning from government

WHO report

Travel Safety

Judgment of travel safety differs from travel company to company

Independent information

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How is Terms and Conditions regulated in Japan? Theoretically Terms and Conditions offered to

traveler by travel company is regulated by the Government body called Japan Tourism Agency which is under the Ministry of Land, Infrastructure, transportation and Tourism.

Any disadvantageous amendment by the travel company to the Terms and Conditions shall be void.

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Right of cancellation of traveler Article 16 2(3) of Terms and Conditions approved by

Japan Tourism Agency

A traveler may cancel a package tour ----------In the event that a natural disaster, a war, a riot, the suspension of the provision of transportation and accommodation facilities, etc.an order of a government or other public offices, or any other event has occurred, and the safe and smooth operation of the travels has become impossible or there is a high probability of such impossibility arising:

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Right of cancellation of the Company Article 17 (7) of Terms and Conditions approved by

Japan Tourism Agency

In the event a natural disaster, a war, a riot, the suspension ofthe provision of travel services of transportation andaccommodation facilities, etc., an order of a government orother public offices, or any other event in which the Companyis unable to intervene has occurred, and the safe and smoothoperation of the travel in accordance with the itinerary mentioned in the contract document has become impossibleor there is high probability of such impossibility arising;

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Definition of safety Client wishing to cancel the booked package tour without

paying cancellation charge insisted right of cancellation of the traveler, arguing safe and smooth operation of the travel at destination became nearly impossible.

Then who decides safety at destination? Up to date it is thought travel company has more

information on destination than traveler as travel company has more source of information such as local representatives, local agent and its link with government.

Therefore, travel company’s decision is advantageous and applicable.

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Overseas Package Tour JTB decided to cancel tours to Mexico on Apr.26 and also

decided that all tours staying/traveling in Mexico should return to Japan immediately in accordance with Article 17 (7) that safe and smooth operation of the travel arrangement in the contract document has become impossible.

Being almost unaware of the situation, some travelers in remote holiday resort in Mexico were reluctant to stop holidaying and return to Japan.

We persuaded them to leave by explaining further stay may result in missing outward-bound flights.

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Overseas Package Tour (2)

THEN how about organizing package tours to other parts of the world and resuming tour to Mexico?

Is it a safe destination? We gathered information from various sources and tried

to confirm/verify the safe and smooth operation of the tours.

We continued selling package tours and resumed tours to Mexico on May 29, though WHO raised its alert level to Phase 6 two weeks later.

We valued a WHO announcement.

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How new type influenza affected tourist behavior in Japan (1)

At the outbreak of swine influenza (Influenza A) in Mexico in April, it was very hard to decide or foresee how severe it would be and quickly it spread globally.

Many companies had adopted risk management guideline against new type influenza, the guideline was for avian influenza(H5N1), more lethal than swine influenza(H1N1).

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How new type influenza affected tourist

behavior in Japan (2) Coming to know that the overwhelming

majority of patients of Influenza A continue to experience mild illness instead of showing high mortality rate, Government and companies revised its contingency policy.

However, Japanese people had a different view from above. They still worried about going out to the infected area and receiving visitors from those area.

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HYOGO(InfectedArea)

TOKYO(Capital)

J a p a n

Kinki Area(in yellow)Most damaged area, suffering millions of lost incomes KYOTO

(Ancient Capital)

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Troubled figures in Kinki Area for one month after the first patient was

reported in Kinki Area Number of cancellation at hotels 360,000 Lost income 45 million (US$) Temporary total closure of primary/high school

　　　　　　　　　　↓　　 An emergent local government subsidiary was

proposed and approved!

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Domestic TourSchool overnight excursions A large number of schools cancelled its school overnight

excursions to Kinki Area due to influenza. Local educational board in Kinki Area recommended that

local school reconsider operation of school trip. Almost all schools in Kinki Area decided to cancel or

postpone its excursions to other parts of Japan following recommendation.

Being at a loss of the sudden school decision and reluctant to pay cancellation charge, some student parents began to demand compensation.

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Domestic TourSchool overnight excursions (2)

Travel company arranging those trips may charge cancellation fee to those schools/parents in accordance with a contract, but JTB decided to waive cancellation charge as long as school postponed its trip instead of total cancellation (until local government decided subsidiary).

As JTB is a leading travel company in Japan, some other large travel companies followed suit.

But many other travel company charged cancellation fee. By huge local demand (parents, schools, service providers)

local government in Kinki area decided subsidiary to service providers.

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School overnight excursions abroad

School overnight excursions abroad is also popular among private schools in Japan.

Popular destinations are Australia, Korea, Taiwan, and China.

Total ban on school trips from Japan imposed by the Australian government and restriction made by the Chinese government were a big shock.

Thousands of students had to give up their once in a life time experience of going abroad with school friends.

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How to deal with global threat affecting travel across the globe? Global threat such as new type influenza is not common

for us all. We may face another wave soon. When it happens, many nations tend to take nationalistic

policy towards foreign visitors by restricting right of free travel.

But such policy does not work because any nation cannot survive without any trade, exchange of business and people.

In the event that any travel restriction is necessary, cooperation with other nations is indispensable so that the most appropriate policy can be taken.

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Thank you very much for your attention.