Downturn hits international travel; flights from USA cut

— -- The global economic storm is hitting what once was the most profitable part of the airline industry: international travel.

With demand for international trips in free fall, most U.S. and foreign airlines are cutting international service to and from the USA. They're reducing the number of scheduled flights or parking big jets and putting passengers on smaller ones to avoid flying money-losing, half-empty flights.

In March, there will be about 466,000 fewer seats — about 15,000 seats a day — on scheduled non-stop flights from the Lower 48 states to foreign destinations, according to OAG-Official Airline Guide flight schedules analyzed by USA TODAY. Industrywide, that's a 5.3% March reduction year over year. Some carriers have cut capacity to and from the USA by a third.

The heavily traveled business route between London and New York began to sag in the fall, after Wall Street melted down. Now, most international carriers feel the recession wherever they fly.

"This has the signs of being a travel downturn that's deeper and longer than the one after the Sept. 11 attacks," says Simon Talling-Smith, British Airways' top executive for the Americas. "This is a much more global downturn than that one was."

China traffic down

Reports from the International Air Transport Association, which represents more than 200 airlines worldwide, support that. Airlines' first- and business-class cabins are feeling the impact most acutely.

IATA chief economist Brian Pearce says international passenger traffic in trans-Atlantic business and first class dropped 9% in November. Across the Pacific, premium-cabin passenger traffic plummeted 17%.

"Businesses are cutting costs wherever they can, and business people are just not traveling," Pearce says. "There's no sign of this leveling off."

Six U.S. carriers — American, Delta, JetBlue, Northwest, United and US Airways — have received permission from the U.S. Department of Transportation to postpone the launch of new international routes.

Four of those are routes to mainland China, which until recently were among the most coveted and potentially profitable because of China's economic power.

US Airways postponed Philadelphia-Beijing — its first and only service to China — for a year, until March 2010. American delayed its new Chicago-Beijing service until April 2010. Northwest postponed some new Detroit-Shanghai flights until June and some until March 2010.

Meanwhile, Continental last week sparked a fare war to Shanghai's financial capital. Continental, which on March 25 will launch non-stop service between Newark and Shanghai, cut its cheapest round-trip coach fare to $777.

In response, American and United, which fly to Shanghai from Chicago O'Hare, cut their cheapest round-trip coach fare to $705, forcing Continental to cut fares again.

Mo Garfinkle, a Virginia-based aviation consultant who once spent 60% of his time in Asia with clients, has seen a sea change in the last few months. "Asia has been hit the hardest because it was the export capital of the world," says Garfinkle, CEO of GCW Consulting. "Now everyone's talking about survival, not growth."

Northwest, which operates a hub at Tokyo Narita and is heavily exposed to Asia, has cut the number of seats on its non-stop international flights by 15.4% compared with last March, OAG says. That's partly because Delta and Northwest merged last year and are streamlining routes to cut costs. Northwest's flying capacity to Japan will have dropped by 19%.

One U.S. carrier bucking the trend is US Airways. Although it's postponing its new flight to China, it's adding 14.8% more seats on other international flights.

Spokesman Jim Olson says US Airways wants to follow through on its goal of diversifying its mostly domestic route network by adding more foreign routes.

This year the airline plans to start flying Philadelphia to Tel Aviv; Philadelphia to Oslo; Philadelphia to Birmingham, England; and Charlotte to Paris.

During normal economic times, airlines generally make more money on international routes. There's little competition on many international routes from low-fare carriers compared with domestic routes.

Among foreign carriers, London-based Virgin Atlantic Airways has cut flying capacity from the USA by 16.6%, partly because of lower demand for flights to Britain.

Carriers worldwide are doing what U.S. airlines are in the face of big fourth-quarter losses: scrutinizing ticket bookings, routes, jet fleets, staffing — and parking planes and rethinking or canceling jet orders.

Giant British Airways, which was highly profitable during its last fiscal year, is projecting losses. BA has parked two Boeing 747s and is in talks with its labor unions, seeking pay cuts and more productivity.

Cost-cutting "is absolutely necessary for the airline to survive," BA's Talling-Smith says. "It feels like we're in a very dark time."