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TravelHaven News Brief – U.S. carriers expanding China service

With business travelers in China waiting up to five days for business-class tickets on flights home U.S. airlines, including Delta and United-Continental, have been prompted to increase their flights to and from Asia. These expansions are fueled by packed business flights, a Chinese economic growth that’s triple that of the U.S., and access to an airport nearer Tokyo.

The surge in Asia/Pacific demand makes last-minute flights especially difficult to obtain compared with even a year ago. Then calling the day of travel presented no problem. The region has experienced a more than 10% increase since 2009 from a year earlier, as compared to the European gain of 4.4% and 6.7% for North America.

Although United leads U.S. airlines in China service, it plans to start Los Angeles-Shanghai flights next May. American Airlines will add service on the same route and may fly to Hong Kong and Guangzhou as well.

Delta is especially active in the hunt. In addition to Seattle-to-Beijing and Detroit-to-Hong Kong flights that initiated in June of this year, the company has announced Tokyo-Guangzhou service for April of next year, followed by twice-weekly service between Atlanta and Shanghai in June 2011, and five flights per week from Detroit to Beijing beginning next July. Recently established Japan-Hawaii service has also been doing well.

Hawaiian Airlines introduced Honolulu-to-Tokyo service in November 2010 and will add Seoul as a destination in January 2011.

Singapore Airlines increased their weekly business-class-only flight to Los Angeles from five to seven offering this past October and implemented the same increase for its Singapore-Moscow-Houston service. Hong Kong’s biggest airline, Cathay Pacific Airways Ltd., is also a major competitor in the region.

China service was cut heavily due to the recession as U.S. carriers deferred service to Beijing and Guangzhou over other destinations. Overall, the eight largest U.S. airlines posted net losses of $15.1 billion in 2008 and $3.5 billion in 2009.

The group’s return to profit this year, with third-quarter net income of $2.4 billion, has begun a fresh round of expansion, particularly for Asian destinations. Profit for all carriers serving Asia and the Pacific is forecast to hit $5.2 billion this year. United indicated that per-seat revenue on Pacific service rose 41 percent last quarter in comparison with the third quarter of 2010. Delta had a 45 percent surge and American posted a 21 percent increase.

Overseas flight revenue for U.S. companies is expected to climb about 10% in 2011. On the other hand, domestic service is forecast to increase just 1%.

Also, discount carriers are not a major factor on trans-Pacific routes which allows airlines more control over pricing. Then too, airlines value the flights because corporate travelers will pay a premium for first or business class on trips of 10 hours or more, such as United’s nonstops between San Francisco and Shanghai. In the past year, fares have sky-rocketed. Japan Airlines business class tickets to Tokyo on go for up to $10,000 round trip; a year ago that ticket could be had for just $3,500, if you planned ahead.

Service to Tokyo will be more convenient thanks to provisions of an ‘Open-Skies Treaty’ that allows U.S. carriers use Tokyo’s Haneda airport for the first time in three decades. Delta will offer Haneda flights from Los Angeles and Detroit in February, while American flies there from New York. Hawaiian’s Tokyo flights also will use Haneda, a 13-minute train ride to Tokyo’s main loop rail line, saving up to an hour of transit time. Foreign carriers have only been allowed to fly to Narita International Airport up to now, 40 miles from downtown Tokyo.