Delta, United slashing international flights

updated 12:58 p.m. ET March 10, 2009

MINNEAPOLIS - Travelers who used to fly in the expensive seats up front are moving toward the back of plane, if they fly at all, forcing airlines to cut back on overseas flights that used to be their crown jewels.

Delta Air Lines Inc. said on Tuesday it will cut international flying another 10 percent beginning in September. United Airlines is cutting international flying 15 percent in the first quarter alone. Those two airlines are by far the largest U.S. carriers to Asia.

And while airlines can shrink domestic flying by shifting to smaller jets on certain routes, that’s harder to do with international flights, where they only have so many planes capable of long-haul trips. So United eliminated its Los Angeles to Hong Kong and Frankfurt flights. Delta’s plans to add New York-JFK to Gothenberg, Sweden and a second daily flight from JFK to Tel Aviv in June have been postponed, spokeswoman Betsy Talton said on Tuesday.

Leisure travel has been falling, too, but less than business travel. Airlines have been able to entice vacationers with lower fares, but that hasn’t worked on business travelers, said Helane Becker, a transportation analyst with Jesup & Lamont Securities Corp.

Many of them are dealing with reduced corporate travel budgets that either rule out flying altogether or require them to book coach on shorter flights. For instance, a 9-hour minimum to book a business-class ticket would put an East Coast traveler to Western Europe in business class.

For the airline, “there’s a huge difference between a $4,000 business-class ticket and $1,500 coach class tickets,” she said. Some flights to Europe are running in the $300 to $400 range if they’re booked far enough in advance.

The reduction in international flights is a reversal from the past few years, when airlines aggressively added international routes. Northwest Airlines’ Asia routes were a key selling point when it was acquired by Delta last year.

Delta said its international reductions will target its Atlantic and Pacific networks, where revenue has been weakest. Delta said it will exit low-performing markets, adjust frequencies and move some markets to seasonal service. It said it still plans to increase Latin America capacity in the fourth quarter.

At the same time, United is spending money to upgrade its business class and first-class international cabins. That leaves those front-of-the-plane cabins with 20 percent fewer seats, although the total number of seats is rising 3 percent. The customer response has been “overwhelmingly positive,” Chief Financial Officer Kathryn Mikells said at an investor conference in New York.

“The premium cabin seat-count reduction is coming at a particularly opportune time, helping us to size these cabins more appropriately for this current down cycle,” she said.

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She said United would cut more from its Pacific flying than from other markets, and that United has also cut the amount of seats headed to London.

American Airlines plans to cut international flying 2.5 percent this year. International bookings over the next four months are running 4.5 percentage points behind the same period last year, said Chief Financial Officer Thomas W. Horton of American parent AMR Corp., speaking at the same investor conference.

American’s international traffic for February dropped 13.2 percent from a year ago.

United, a unit of UAL Corp. saw trans-Pacific and Latin American traffic each fall more than 24 percent last month. Delta reported that February international traffic fell 10.1 percent across its flights and Northwest’s.

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Standard & Poor’s airline equities analyst Jim Corridore said international flights are being cut now because airlines already pared their domestic schedules last year. Meanwhile, international travel held up relatively well until the banking crisis hit in the fall. After that, “some of those centers like London that are real banking hubs saw a huge falloff in travel demand,” he said.

He noted that American and Continental have not announced major international capacity cuts. Yet.

“Delta and United have; I would expect the other two to eventually follow suit,” he said. “We’re not going to see major growth internationally for a while.”

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