Cabs Ferry $300 Steaks, Boxes Use Plane Seats in Virus-Hit Japan

(Bloomberg) -- Japan’s transport sector, hit by the sudden drop in passenger traffic caused by measures to contain the spread of the coronavirus, is coming up with novel ways to scrape in revenue using excess capacity.

ANA Holdings Inc., the nation’s largest carrier, is using seats in cabins in addition to cargo space to haul cardboard boxes filled with masks and other protective equipment to places that need supplies. Nihon Kotsu Co., Tokyo’s biggest taxi company, is using its cabs and drivers to deliver $300 steaks from Wolfgang’s Steakhouse, the local outpost of the New York restaurant.

Japan has so far avoided the induced economic coma seen in other major economies, with many local restaurants remaining open for business even as citizens are encouraged to stay at home. But people are traveling less, with fewer taxis on the streets and thousands of domestic and international flights canceled, which is starving transport providers of income.

“There may not be a lot of people who can spend a lot, but for those who have money, they have fewer ways to spend it,” said Ichiro Kawanabe, chairman of Nihon Kotsu. “For those people, we’re able to deliver value while keeping business activity going.”

The proposition is straightforward: an expensive steak or well-crafted meal requires more care and attention, as well as speedier delivery, compared with a food-delivery service via bike or a motorcycle. The stay-at-home measures, which the Japanese government is saying should be kept in place until the end of May, has led to a boom in food-delivery services such as Uber Eats and Demae-can Co.

At Wolfgang’s Aoyama restaurant, there are one or two orders a day for taxi-delivered meals, at more than 100,000 yen ($940) apiece, according to general manager Tetsuya Kobayashi. The fixed-rate delivery fee of 3,300 yen is limited to destinations within 30 minutes, which relatively speaking can be cheaper than the fees charged by some delivery services.

“We can offer prices close to the in-house experience with similar quality,” Kobayashi said. “The delivery area is large, and it’s reassuring that they will be careful.”

Chinese restaurant Fureika is also offering taxi-delivered meals using Nihon Kotsu’s taxis. Given that many high-end restaurants had very little experience with takeout or delivery, many have asked about the service, according to Kawanabe.

Taxi revenue across Japan fell 54% in the first half of April, said Kawanabe, who also chairs the Japan Taxi Association. The Ministry of Land, Infrastructure and Transport has also granted the industry permission through Sept. 30 to transport cargo in order to weather the challenging business environment.

For the Japanese carriers, and other airlines across the globe, the pandemic has been brutal. ANA reported a 59 billion yen operating loss for the first three months of the year, with international flights down about 90% and domestic schedules down by about 70%. Even so, they are planning to add flights to transport medical equipment to meet that demand.

“It’s a desperate measure to bring in revenue, but the effort to stem the drop in income is positive,” said Kenji Kanai, an analyst at Tokai Tokyo Research Institute.

©2020 Bloomberg L.P.