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Airlines Cut More International Flights Due to Business Travel Slump

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Plane landingSeveral large American carriers are planning additional cuts to international routes in the near future amid tumbling demand for seats, especially among business travelers.

Delta, United and American Airlines all announced yesterday that they would cut international capacity by between 2 and 15 percent, primarily on trans-Pacific and trans-Atlantic routes.

Delta, which is fresh off its merger with Northwest Airlines, said that it will be reducing Asia flights by 14 percent and trans-Atlantic flights by up to 13 percent later this year.

The move comes a month after the airline announced a plan to reduce overall capacity by 6 to 8 percent.

The airline’s previous plan involved cuts to some routes such as Hong Kong and Tokyo, and the addition of new routes to Sweden and additional flights to Tel Aviv. However, the additions have now been postponed, according to Delta.

At United, international flights are being reduced by 15 percent in the first quarter of 2009, with Los Angeles to Hong Kong and Frankfurt flights on the chopping block. The company said that demand for Asia flights has dropped by 25 percent in the last few months.

Delta Northwest mergerIn a effort to raise additional revenue amid changing passenger demographics, United is also shifting cabin layouts in its long-haul planes to boost the number of economy seats and reduce the number of business and first class seats.

Over at American the outlook is slightly less bleak. The airline plans to trim international capacity by 2.5 percent in response to a 4.5 percent dip in bookings. Analysts say that American’s financial position is stronger because it is spending billions less on fuel this year compared to last year.

The cuts have been driven by shrinking numbers of passengers traveling internationally. According to the International Air Transport Association, demand for international flights fell 5.6 percent in January 2009 and 4.6 percent in December 2008, compared to the same period in the prior year.

Business travel is the sector that has seen the biggest dropoff in recent months. While leisure travel started to fall as much as a year ago, business travel stayed strong until the banking crisis which started last September. Since then companies have severely reduced the amount and type of travel they are permitting their employees to do.

Transportation analysts say that some corporations are simply ceasing to send employees abroad, or are requiring them to buy cheaper coach tickets instead of pricey first or business class seats.

The forecast is pretty bleak for the next year, as experts see no end to the contraction that has so far led to the loss of 29,400 U.S. airline jobs and the mothballing of more than 500 jets since the beginning of 2008.

But some airlines and routes are continuing to do fairly well. Continental does not plan to make cuts, but is instead shifting its resources from less-profitable to more-lucrative routes. Delta plans to add more flights to Latin America even as it cuts flights elsewhere, and is even expecting to turn a profit in 2009.

By Karen Elowitt for PeterGreenberg.com.

Related links: USA Today, Associated Press, USA Today, Chicago Tribune

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