Airlines' international growth hits headwinds

Runaway fuel prices and a weakening economy are forcing airlines to taper international expansion this fall, reducing the growth of new flight options from the USA to the slowest rate since 2003.

For October, airlines increased seats on non-stop flights from the lower 48 states to foreign destinations by just 1% compared with last October, a USA TODAY analysis of flight schedules shows.

Last year, they'd boosted seats by 5%, adding non-stop routes and frequencies to business destinations throughout Asia, the Middle East and elsewhere.

Yet, as oil prices continue to rise and pressure airlines to scrutinize their non-stop flight offerings, global business travelers are expected to suffer from fewer schedule reductions than jet-setting leisure travelers and U.S. domestic travelers.

"International business travelers really are the creme de la creme for airlines," says Chris Spidle, research director at Sabre Airline Solutions. "They typically are some of an airlines' highest-revenue travelers."

International airfares are also rising at a faster pace in October than domestic fares, which is helping the international market to outperform the domestic market so far this year, Spidle says.

According to a Sabre Airline Solutions analysis of fares bought through Sabre's computer reservations systems by June 30 for October travel, the average round-trip fare for an international ticket ($969) jumped 11.3% over a year ago. In contrast, the average round-trip ticket for a domestic flight ($309) cost 8.8% more than a year ago.

People who fly frequently outside the USA for business will also likely see fewer schedule reductions than other types of travelers for other reasons.

Airlines are generally reluctant to give up international routes that require more rigorous government approvals than domestic routes, Spidle says.

And airlines operate most international flights with larger jets, which provide better fuel efficiency per seat than smaller jets that fly within the USA, he says.

"You don't want to give up years of investment because of a temporary problem," Spidle says.

Business travel also continues to hold up for now in Europe, the USA's largest overseas market, says Brian Pearce, chief economist for the International Air Transport Association. He credits the weak dollar, which encourages European tourists to buy tickets on U.S. airlines and spurs export-related travel.

But not every flight is safe from reduction, elimination or postponement. And whether business travelers see their most common airline flights affected will depend on their preferred airline.

In October, United will reduce its international service slightly, with some cuts coming as it grounds older, less efficient aircraft. It's axing non-stop service between Los Angeles and Hong Kong, for instance, while launching new non-stop service to regions such as the Middle East.

Paul Mayo of Port St. Lucie, Fla., the Middle East sales manager for his company, says he's been able to shave hours off long journeys to Kuwait as United increased its non-stop service. And in October, United is going to start flying non-stop to Dubai, which will save him even more time when visiting customers.

"That's good news," Mayo says. "Usually, I fly through Frankfurt or Zurich on Lufthansa or Swiss Air. But with this (the Kuwait and Dubai service), you're saving connection time and gaining convenience, and there's less chance of your luggage getting lost."

  • 1
  • |
  • 2
Join the Discussion
blog comments powered by Disqus
You Might Also Like...