United States Airports See Fewer Travelers Taking Flights This Holiday Season

It now seems that air travel over the holiday season will fall by 2.5 percent when compared to last year. The Air Transport Association of America said that it expects 41 million passengers to fly on United States airlines over a 21 day period from December 17th to January 6th. The busiest travel days are expected to be Sunday, Monday, and Tuesday after Christmas on December 26th through the 28th.

The president of the Air Transport Association, James C. May, said the lighter traffic over the holidays would continue a trend that has been seen throughout 2009. This is all due to the weak economy taking a toll on travel demand.

However, the group did note that the planes are still going to be full. Due to low travel demand, many airlines have cut flights, meaning planes that are flying will be packed. Airlines have already been losing money this year as traffic has declined during this economic slowdown. Airlines have raised fees and tacked on surcharges to flights to try and make up the difference.

Over the past week, officials with the nation’s three largest airlines, which would be United, American and Delta, said that they are seeing some improvement in demand. Delta said it’s selling more corporate tickets, and American Airlines said that demand is improving for leisure and premium travel. It is expected that United is showing signs of recovery as well.

For any holiday travelers, the Air Transport Association of America suggests that people check the status of flights before heading to the airport. Gifts should remain unwrapped, because they will have to be inspected by federal security officials at the airport.

Delta Air Lines to Introduce Nonstop Flights Between Detroit Metropolitan Airport and Sao Paulo

Delta Air Lines (Atlanta) announced plans to introduce the first-ever nonstop flights between its Detroit Metropolitan Airport hub and Sao Paulo.

Delta has requested authorization from the U.S. Department of Transportation (DOT) to introduce two weekly flights between Detroit and Sao Paulo beginning November 4, 2010. Delta already holds certain rights to operate Sao Paulo service, but requires DOT permission to fly from Detroit. The airline would operate the flights using 216-seat Boeing 767-300ER aircraft with 35 seats in BusinessElite and 181 seats in Economy Class.

Brazil would be the latest addition to a long list of new services introduced from Detroit since Delta’s merger with Northwest Airlines last year. Other planned or recently launched nonstop routes from Detroit include :

- Detroit to Shanghai, service expanded from five-times weekly to daily, beginning May 1
- Detroit to Seoul-Incheon, new five-times weekly service beginning June 1
- Detroit to Hong Kong, new five-times weekly service beginning June 2
- Detroit to Rome, new daily summer seasonal service, first introduced in June 2009 and returningJune 1, 2010
- Detroit to Tokyo-Haneda, planned daily service pending U.S. Department of Transportation approval

British Airways First Fly Business Class Services From London To New York

British Airways, which is starting a business-class-only service from London to New York on Tuesday, may eliminate some short-haul flights to restore earnings.

“This is an airline that really has to bite the bullet on short-haul, looking long and hard at what it’s costing and whether they can ever get a decent margin out of it,” said Howard Wheeldon, senior strategist at BGC Partners in London. “Some U.K. and European routes have a very limited future.”

Fares between European countries have declined as discount carriers like Ryanair and EasyJet grab market share. Routes like London to Paris, where British Airways pioneered the first international air service in 1919, may be among the first to go because of the shrinking profit margins and the effect of the competing Eurostar high-speed rail service, Mr. Wheeldon said.

British Airways is already the biggest carrier between Europe and the United States. The business-class-only experiment from London City airport will help Willie Walsh, British Airways’ chief executive, determine whether the company can fill planes with people flying to and from London alone or whether it still needs a substantial European network to feed passengers from around the region onto long-haul flights.

The carrier, Europe’s third-largest, has historically made almost all of its profit from first- and business-class travel and last year derived 45 percent of revenue from premium tickets that accounted for only 13 percent of seat sales. The company’s revenue fell 12 percent in the three months through June as it had a £106 million ($169 million) net loss, the carrier said July 31.

The recession has led to a 12-month decline in bookings that has left premium seats sparsely populated as people avoid flying or trade down to economy class. Premium traffic at the carrier fell 12 percent last month, compared with a 1.3 percent gain in coach, and Mr. Walsh told shareholders on July 14 that demand might never fully recover.

The declines have prompted British Airways, which is based in London, to review its model for short-haul services and the Club Europe business-class brand, Peter Simpson, managing director of the CityFlyer regional unit, said in an interview. His division is responsible for European and domestic routes already served from London City.

“We have looked at Club Europe within the current environment and our customers are telling us that yes, there is a demand,” he said. “The market will dictate whether it’s still around in five years’ time.”

Richard Tams, the British Airways sales chief for Britain and Ireland, said in an interview that the carrier still needed European feeder traffic to help sustain longer routes and that, for business travelers, offering daily flights was a minimum requirement.

The London-New York service beginning on Tuesday will provide evidence of the carrier’s ability to lure bankers, lawyers and other professionals with a premium-only product costing £1,900, or $3,032.25, for a round-trip ticket. Financial institutions accounted for 13 of the airline’s top 50 clients last year.

Airlines Companies Revenues Under Pressure Impact From Oil Prices Dropp

With oil price having dropped to $35 a barrel levels, airlines will see their revenues come under pressure and yields (the average revenue per mile per paying passenger) disappearing, besides airfares being revised downwards in 2009, according to industry experts.

“Oil at below $35 a barrel is not that bad news for the airlines. But this would result in airlines revising their ticket prices downwards in 2009, which would mean that revenues are going to drop and the yields will be lost,” Kareem Murad, Vice President – Research at Shuaa Capital, told Emirates Business.

Explaining the rationale behind such a move, he said: “When oil prices went up to the levels of $147 a barrel, the airlines’ operating costs also went up substantially, and when the oil price fell, their operating costs came down too.”

“However, just because revenues would be lower, it does not mean that the airlines’ profitability will be lower as well in 2009, because on the other hand cost has dropped as well,” he added.

Gulf airlines, on the other hand, seem to be in line with their strategies. “The price of oil is constantly changing, it always has and always will. We are happy that the price of oil has come off record highs. We are happy with our hedging position and are in a strong position to take advantage of lower market prices,” said Iain Burns, Etihad AirwaysEtihad AirwaysLoading…’ Vice-President – Corporate Communications.

EmiratesEmiratesLoading…, meanwhile, did not reveal specific impact of sliding oil prices on its revenues and profits. “We have been monitoring fuel prices closely, and since August 2008, we have implemented two rounds of fare reductions in the UAE, reflecting the softening fuel prices,” the airline’s spokesperson said.

Regarding the impact of falling oil prices on airline’s expansion and future investment, the spokesperson said EmiratesEmiratesLoading…’ plans for growth “remain unchanged”.

Welcoming the drop in oil prices, Sharjah-based budget carrier, Air ArabiaAir Arabia
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’s spokesperson, Housam Raydan said: “Mid-range price of oil is always better for the economy and for airlines. Air ArabiaAir Arabia
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enjoys one of the world’s lowest operational costs and we will remain price competitive in 2009.”

All said and done, airlines will all in likelihood, fall back on their old behaviour, according to Addison Schonland, a US-based aviation analyst with Innovation Analysis Group.

“They will cut fares to add load factor. But of course that does not help with profitability. To recover costs airlines must focus on revenues — cost are pretty much cut to the bone,” he said.

“Oil price below the levels of $35 is a two-edged sword – it is great for airlines’ costs which were thrown out of whack by the oil spike. But prices have fallen because of falling consumption, which is driven by dropping consumer confidence the world over. So even though costs have dropped, demand for travel may drop off even faster,” he added.

Jetstar Begin Direct Flights Between Gold Coas and New Zealand Resort

Jetstar will begin direct flights between the Gold Coast and the New Zealand resort town of Queenstown in time for Christmas.

The inaugural Jetstar flight from Queenstown will arrive at the Gold Coast Airport on Friday morning.

The new service will operate twice a week and is expected to prove popular with passengers travelling both ways across the Tasman, on top of existing flights to Auckland and Christchurch.

Gold Coast Airport chief operating officer Paul Donovan said it would be especially popular in winter, with Queenstown one of the world’s premier skiing destinations.

“It’s also no secret that New Zealanders love coming to Australia … in search of sun and surf,” Mr Donovan said in a statement.

More than 200,000 New Zealanders have visited the Gold Coast in the last 12 months.