A slowdown in Chinese manufacturing, coupled with the U.S. recession, has sharply slowed the growth of air traffic on U.S. airlines’ routes to China, but some carriers are going ahead with plans to expand service.
Continental Airlines Inc. on Wednesday will launch daily direct flights between Newark Liberty International Airport and Shanghai. “Shanghai is one of the most promising international markets currently without daily nonstop flights from New York,” said spokeswoman Julie King. Continental already offers daily flights from Newark to Beijing.
Delta Air Lines Inc. said it plans to add new flights from Detroit to Shanghai, beginning June 3. The airline currently offers four weekly flights between Shanghai and the carriers’ Atlanta hub. Detroit is a hub for Northwest Airlines, acquired by Delta last year, in part to benefit from Northwest’s strong Pacific route network.
United Airlines, a unit of UAL Corp., said it will delay the start of service from San Francisco to Guanzhou, a manufacturing hub in southern China. United, which has the biggest route network in the Pacific, now flies direct from four U.S. hubs to Beijing and Shanghai.
United, along with other airlines, said it will reduce capacity on Pacific routes as needed to match weak passenger traffic.
In recent years, U.S. carriers battled to win new U.S.-China routes as the two country’s governments signed treaties to increase air service.
Fueled by growing business trade, U.S./China was one of the fastest growing international markets at the beginning of 2008. Bidirectional traffic between the two countries jumped nearly 24% higher in January of 2008, compared with the previous year. With relatively few direct flights available, airlines expected each route to generate millions of dollars in annual revenue. But during the the course of 2008, air traffic began to tail off, even posting 2% decline in September, according to data from the International Air Transport Association, a trade group.
As well, major carriers were battling skyrocketing fuel costs, which made some flights unprofitable. Last summer, five of the largest U.S. carriers all got permission from the U.S. Department of Transportation to delay new service to China that they had fought hard to win. American Airlines, a unit of AMR Corp., which flies direct every day between Shanghai and Chicago, has postponed additional service to China until 2010.
Air traffic between the U.S. and China is likely to remain weak for a while. According to IATA, premium air travel, for highly-profitable business and first- class tickets, on Pacific routes fell an unprecedented 24.7% in January of this year, as business travel tanked. While some business travelers are trading down to economy class tickets, others are canceling trips. With world GDP still falling, “The bottom for the decline in premium travel numbers is not yet in sight,” the group reported.