US airlines look to Asian routes

Aiming high

New York, April 16 (Reuters): Large US airlines, haemorrhaging from competition at home, are looking at routes halfway around the world to stop the bleeding.

As the industry struggles with its worst crisis in years, US carriers are focusing on Asia — mainly China and India — to make up for ballooning losses on the domestic front.

American Airlines and Continental Airlines earlier this year won federal approval to begin direct flights to China. They join ranks with United Airlines and Northwest Airlines — the only two US carriers that have served China for the last two decades.

The US airline industry has lost more than $36 billion since 2001, the year of the September 11 attacks on the World Trade Centre, as growing domestic competition has pushed fares lower amid rising fuel prices.

US carriers, which lost $10 billion in 2004 alone, are battling for new flights to China as they aim to tap rising demand for travel to the world’s fastest-growing major economy.

Agreements between the United States and China that limit the number of flights between the two countries give carriers the advantage of knowing who their rivals are, while also keeping the level of competition in check, Continental Airlines spokesman Dave Messing said.

On the flip side, the tight regulations limit carriers’ access to those routes.

“Whatever any US airline can get of this fast-growing Asian market is great and will help substantially, but there isn’t enough of it to stave off imminent bankruptcies or liquidation,” Morningstar analyst Chris Lozier said. “And the regulations mean that it will be a period of years before certain carriers will benefit at all."

Lozier is one of several analysts to express concern about some large companies, particularly US Airways, which is in Chapter 11 protection, and Delta Air Lines, which has been teetering on the verge of bankruptcy.

One airline analyst, who requested anonymity, said the new, profitable routes to India and China would “just not help those two carriers fast enough”"

China, whose increasingly affluent populace is taking to the skies for business and leisure, is emerging as a strong travel market. As many as 100 million Chinese could be flying abroad every year by 2020, up from 20 million in 2003, according to the World Tourism Organisation.

Source: http://www.telegraphindia.com/