Posted on: Sunday, March 10, 2002

Decline in global air travel slowing

Advertiser News Services

Airlines' international traffic fell 10 percent from a year ago in January, slowing from December's drop, as passengers began returning after the Sept. 11 attacks, the International Air Transport Association said.

The "speed of the decline was slower" than the previous month as the drop was "two percentage points better than in December 2001," while the decline in freight traffic was "more than six points better," the association said in an e-mailed statement.

The load factor, or proportion of seats filled, rose by almost 1 percentage point from a year ago to 71 percent in January, the association said. Carriers cut seating capacity 11 percent. Worldwide cargo traffic fell 4 percent, the group said.

Airlines' traffic fell by as much as one-third as travelers avoided flying after the attacks on New York and Washington. Carriers cut seating capacity to match the decline in demand and slashed fares to attract passengers.

Analysts have said since late last year that demand for air travel is now reviving.

Travel rising on European airlines

British Airways Plc, KLM Royal Dutch Airlines NV and other European airlines are seeing passenger traffic recover from the drop after the Sept. 11 attacks as they attract passengers with lower fares.

British Airways said February traffic fell 2.5 percent, less than January's 6.9 percent drop, while KLM's fell 5 percent compared with January's 7 percent drop. And European airlines' international traffic fell 2.5 percent from a year ago in the week through Feb. 24, slowing from the previous week's 3.4 percent fall, the Association of European Airlines said.

Travelers are returning to the skies, after a decline in traffic of more than a third, as British Airways offers round-trip fares of $134 from London to Amsterdam, Brussels or Paris. KLM is selling tickets over the Internet for about $200, or half price, from Amsterdam to New York. The carriers also have grounded planes to cut seating capacity and cost.

"The figures show the positive trend is continuing," said Nick van den Brul, an analyst at BNP Paribas, who has a "neutral" rating on British Airways and KLM shares. "The important thing is that British Airways and KLM are looking good in terms of load factor which proves their capacity reduction strategies are working well."

Analysts say airlines' yield, or average revenue per passenger, will still suffer as an economic slump means business travelers switch to flying economy class.

"It's too soon to talk of a financial recovery as airlines are bringing back lower-yielding passengers," van den Brul said. "Business class is not creeping back at the same rate."