While the major US carriers remain reluctant to reinstate the long-haul services that they cut last year, some international carriers have been exploring new and occasionally unexpected route opportunities
A year ago, in the wake of crisis, the world's mainline carriers, slashed away at their inter-continental services. Led by dramatic cuts on the transatlantic and transpacific, more than 10%of frequencies were shed across the world's largest intercontinental markets in the winter of 2001. A year later and there are few signs of a rush to add back service, especially among the hard-pressed US majors. Yet some international carriers are now taking selective and occasionally adventurous opportunities to expand.
Europe's flag-carriers are a case in point. Although Lufthansa has kept its transatlantic schedule largely unchanged, there are a few notable additions. Among them was the decision to earlier this year restart the Düsseldorf-Newark route with an all-business class service on a 48-seat Boeing Business Jet. Operated by PrivatAir, the service ran above break-even almost immediately after its June start, says Lufthansa. The flight attracts travellers from the chemical and banking businesses around Düsseldorf, as well as executives whose connections to Stuttgart and Berlin are easier at this smaller secondary airport than at the main Frankfurt hub.
New daily flights between Frankfurt and Abuja, Nigeria, have also added to the attraction of Lufthansa's Texas routes, offering good connections between two important "oil" destinations. That adds to a daily service from Frankfurt to Lagos.
In the Spring, Lufthansa will provide Portland, Oregon, with its first ever non-stop flights to Europe, with a daily Airbus 340-300 flight. Portland has been without any long-haul international service since Delta closed its Asia hub in March 2001. The ambitious venture is being backed by a $10.8 million "travel bank" of advance commitments from local businesses to use the new service. Lufthansa also expects to reinstate a second daily Los Angeles-Munich flight.
Meanwhile, Air France has returned its long-haul capacity to the levels originally scheduled for last winter before crisis struck. Transatlantic capacity for this winter season is 9.2% higher than last year, and 2.2% above pre-crisis plans. Among this winter's increases are a second daily from Paris to Atlanta and a daily to Cincinnati, reinforcing its presence at the hubs of alliance partner Delta Air Lines.
Both British Airways and Virgin Atlantic have used the winter schedule to add a daily flight between London and New York. BA suspended its service to Charlotte, however, which it had served one-stop via Baltimore Washington International (BWI).
In March, BA intends to raise capacity on a number of routes, including boosting frequency from 14 to 19 flights per week at Newark and from 14 to 17 weekly flights at Toronto. An extra daily London flight will also be added to both Chicago and Washington taking them up to three times a day.
Virgin expects to be operating double dailies from Newark by next summer, up from 12 a week today, and will operate twice daily from Washington, up from nine a week. The airline will double weekly flights to the Caribbean with the start of new flights to Tobago and Grenada in May, as well as a new Manchester-Barbados route and additional frequencies on existing routes.
New entrant bmi british midland, continues to build traffic from Manchester to Chicago, but is suspending its Washington service, started in May 2001, for the winter season.
Other additions pencilled in for 2003 include new flights from Continental Airlines between Newark and Geneva; Northwest Airlines service from Detroit to Madrid; and the resumption of service by Aer Lingus from BWI to Dublin and Shannon. The latter is aided by a route incentive scheme of Irish airport operator Aer Rianta, which waives airport charges for new routes for a year and offers steep discounts for the next two.
Looking beyond Europe, Emirates Airlines is gearing up to launch non-stop flights to New York from Dubai by mid-year, followed by service to Chicago some months later. The carrier has been spreading its wings wider and wider - this year from Dubai to Khartoum, Mauritius, Casablanca, Perth and Osaka.
US majors cautious
The US majors, still reeling from the aftermath of the terrorist attacks and an uncertain economic outlook, are generally sticking to the reductions they made last winter on international services and are even making further cuts.
Both American Airlines and Delta cut transatlantic services sharply last year and are not now moving to reinstate many. In some cases they have chosen to maintain a market presence through connections onto services operated by codeshare partners. However, Delta did resume service to Brussels after Sabena's demise, and American, which had pulled out of Italy and Sweden, resumed Chicago-Rome during the summer.
United Airlines is cutting more capacity to Europe, ending operations in January to Düsseldorf and Milan, which it has served from its Washington Dulles hub. It is also downgauging aircraft size on routes to Paris from both Washington and San Francisco from Boeing 777s to 767s. The struggling carrier is to do the same on its Miami-Buenos Aires route as well as closing operations in Caracas, Venezuela, and Santiago, Chile.
Graham Atkinson, United's senior vice- president, international, says results from the four stations to be closed have been "well below United's profitability hurdles" for some years past. The closures and use of smaller aircraft in seven markets - including substituting Boeing 777s for 747s on three transpacific flights - are expected to save United $120 million a year. The three 747s have not yet been earmarked for any routes and could be parked.
While cutting back on those services, however, United did begin new nonstop services from Washington Dulles to Buenos Aires, with tag-end service to Montevideo, Uruguay, and to Sao Paulo, Brazil, with the winter schedule change. The airline had served both cities from New York, dropping Sao Paulo a year ago and Buenos Aires in June. The airline says the move to its Washington hub will add many more connecting options for passengers. The flights will connect to 13 mainline United cities and 37 more regional points, while the flights to New York offered only five network connecting possibilities. The airline's passengers will further be able to connect to 16 major Latin cities via codeshare partners, such as Varig, in Sao Paulo.
The US majors have shown increased interest in the leisure markets into the Caribbean and Latin American. US Airways, for example is pursuing growth into the Caribbean with six new routes - including four new destinations - being launched in the last couple of months of this year.
Elsewhere, though, the reductions in service to South America have continued or even accelerated on the back of the poor economic conditions in the region. As of December Delta is cancelling its non-stops out of Atlanta to Rio de Janeiro and Buenos Aires, citing "significant financial losses". It is keeping only Atlanta-Sao Paulo, despite its aggressive expansion plans over the last few years. American also dropped its daily New York-Rio flights in September, and Continental had dropped Newark-Rio.
Pacific interest
Signs of improving demand in Asia, however, have sparked new interest in the transpacific market. Although winter frequencies are still down overall from the peak in 2000, there have been some seasonal increases in service and further expansion is in the works.
Singapore Airlines (SIA) has perhaps been most adventurous, already launching a new Singapore-Hong Kong-Las Vegas service this year. Following delivery of its first Airbus A340-500 next year, the carrier also plans to start new non-stop flights between Los Angeles and Singapore. That will be the world's longest nonstop. SIA's two current dailies to Los Angeles stop in Tokyo or Taipei, and no reduction in that service is planned. "We always said that the USA is a critical market for growth for us," says the carrier.
SIA has been adding capacity by upgrading aircraft on long-haul routes, substituting 285-seat Boeing 777-200s for older 265-seat Airbus A340-300s. "We're in the middle of a three-year growth programme," says SIA. The carrier has just put the 777s on its services from Singapore via Seoul to San Francisco and to Vancouver. And it operates the new Las Vegas route - which is 15 hours, 25 minutes to Hong Kong - with a 777-200.
Harry Kassap, administrator for market development for Las Vegas McCarran International Airport, says it took six years to convince SIA to start service to Las Vegas. "Hong Kong-Las Vegas, from our standpoint, is an almost unlimited market for the future," he says. "The Chinese love Las Vegas and love gambling, so it's a very good air bridge."
The airport was able to show SIA that many travellers to Las Vegas from Hong Kong and mainland China were using the traditional gateways of Los Angeles and San Francisco. In addition, many top-end customers bound for Las Vegas were already flying on SIA. Gaming licences recently awarded in Macau went to two Las Vegas enterprises, which will provide additional passengers for the Singapore service. "The flight will obviously be the shortest way to get there," Kassap says.
For its part, Cathay Pacific has not changed its US schedule, although it has added flights from Hong Kong to London and elsewhere. But it is currently working with oneworld partner American on potential codeshare routes under the new US-Hong Kong bilateral.
All Nippon Airways (ANA) has been seeing a gradual return of traffic, especially since the spring, and is operating to all US points except Chicago - the only city it completely exited. Its initially hard-hit service to Hawaii has been improving, and capacity was added back in the spring. "It could be better, but it could be worse," an official says.
ANA, though, is offering reduced capacity on several routes by the substitution of smaller aircraft. It began operating a 234-seat 777-200ER instead of a 320-seat 747-400 on both its Tokyo-Washington and Tokyo-Los Angeles routes. "We're increasingly moving to 777s for long-haul services," the official says. A launch customer of the long-range 777-300, ANA will begin taking delivery in 2004.
ANA's operations, as those of many other carriers, have been significantly enhanced by the opening of the new runway at Tokyo's Narita Airport in April and the additional services that were made possible, especially between Japan and China. ANA, which had been flying to the main Chinese cities, was able to introduce second dailies late in the day, allowing travellers from New York to Tokyo to connect within two or three hours to Hong Kong, Beijing and Shanghai. "China has become our biggest overseas market in terms of numbers of flights," says the carrier. "It has surpassed the USA now."
Northwest's passenger traffic on its Japan routes has not rebounded, but it has used new slots at Narita to operate daily round trip, connecting flights, using Airbus A320s, between its Tokyo hub and Pusan, South Korea; and Kaohsiung and Taipei, Taiwan.
Chinese opportunity
Japanese travel has increased substantially to China. The opening of the second runway at Narita coincides with increased Japanese business interest in China after its entry into the World Trade Organization and also with increased Japanese leisure potential to the Chinese mainland.
As ANA and Japan Airlines were increasing services to China, the country's own carriers were able to add five daily flights to Tokyo. China Southern instituted flights to Narita from Guangzhou, and China Northern and China Southwest started new services from Chengdu, Shenyang, Dalian and Chongqing.
Mainland China's carriers are expanding to the USA as well. Air China has begun three weekly non-stops between New York and Beijing, and China Southern is starting a fifth weekly flight between Los Angeles and Guangzhou, China.
There have also been interesting developments in the Europe-Asia market which was substantially changed with the demise of Sabena and the sharply retrenched service offered by Swiss, compared with the former Swissair. There has been growth elsewhere, however. For example, Alitalia is one European carrier taking advantage of new capacity at Narita. It has increased flights between Tokyo and Milan from five to seven a week and is entering the Rome-Tokyo market with three weekly non-stops.
Asiana has also entered Europe for the first time. It followed up new service to Frankfurt last year, which it has been growing as part of its imminent accession to the Star Alliance, with new service to London in 2002. Finnair too has been following through on its declared strategy of building a gateway to Asia, exploiting Finland's geography. With routes to North America still languishing, markets such as those from Europe to Asia offer a rare opportunity.
| Capacity and frequency against baseline December 2000 – OAG schedule data | |||||||
| Regions | Regions/subregion | Weekly seat capacity Dec 00 | Weekly frequencies Dec 00 | ||||
|
|
| ASK m | 2001 | 2002 | Total | 2001 | 2002 |
| North America | W. Europe | 8,697 | -17.0% | -12.1% | 4,855 | -17.0% | 11.0% |
| North America | Asia | 5,216 | -12.5% | -11.0% | 1,671 | -11.4% | -10.7% |
| North America | Latin America | 3,597 | -12.5% | -3.8% | 10,078 | -11.1% | 0.7% |
| W. Europe | Asia | 5,779 | -2.5% | 2.2% | 2,075 | -4.1% | 0.8% |
| W. Europe | Latin America | 2,932 | -1.4% | -0.7% | 1,237 | -1.5% | 0.5% |
| Total of selections |
| 26,222 | -10.6% | -6.3% | 19.916 | -11.3% | -3.1% |
| NOTE: Change shown for December 2001 and 2002 against baseline 11-17 December 2000 from OAG schedule data as published in Airline Business. Figures reflect airlines operating non-stop unrestricted scheduled passenger services. | |||||||
Thinking outside the box
While international carriers have been dropping routes and shuffling aircraft, they also are in the process of making some strategic moves that go beyond their normal alliances, according to Craig Jenks, principal of Airline/Aircraft Projects. "We're seeing some tactical moves out there to add passengers in any way that makes sense outside alliance parameters," he says.
The new fully reciprocal, frequent flyer link-up between Delta Air Lines and Virgin Atlantic, former codeshare partners themselves, falls into this category, he says. The move, which allows frequent travellers in both programmes to earn and redeem miles on either airline, provides Virgin's customers with more flight-redemption opportunities and gives Delta's customers access to London Heathrow flights and some markets Delta does not serve.
Other tactical moves involve codesharing. KLM has sealed a codeshare deal with TAM of Brazil on its Amsterdam-Sao Paulo route. Continental has signed a codeshare with UK regional flybe that will help feed its flights to New York Newark, and is evaluating a similar deal with SN Brussels Airlines. Another example is the "joint operation" planned by Thai Airways and South African Airways (SAA) on Bangkok-Johannesburg using an SAA Boeing 747 next year.
Network opportunities
Airline Business is again bringing airports and airlines together to discuss new route opportunities at the Network 2003 event in Fort Lauderdale in March. To find out more about this US event visit the website at www.networkusa.info
REPORT BY CAROLE SHIFRIN IN WASHINGTON
Source: Airline Business