The transatlantic air travel market in the first quarter of 2009 will lose nearly 384,717 seats, nearly 5 percent less capacity than in the same period this year, according to OAG data. The reduction is surprising, given that new capacity and service flooded the market in the second quarter of 2008, following the enactment of the Open Skies agreement that aimed to grow business between the United States and Europe.
In April, scheduled flights from Europe to the United States grew from 2007 levels by nearly 10 percent, more than half of which involved London's newly unrestricted Heathrow Airport, which many carriers made the focal point of new service
(BTNonline, April 28)However, following that initial surge, carriers cut schedules to cope with growing fuel costs and staggering demand declines, while a few smaller airlines serving the transatlantic market—including all-business class transatlantic carriers Eos and Silverjet—folded. Those factors eliminated the capacity gains that Open Skies briefly brought.
Meanwhile, U.S. airlines slashed domestic capacity in 2008, the results of which are evident in first-quarter 2009 schedules. According to OAG data, 10 percent fewer domestic seats will fly in the first quarter compared with the same period in 2008—twice the decline in the transatlantic market.
Based on a poll of about 50 travel buyers, UBS airline analyst Kevin Crissey in a research note this month showed that the demand trends match the capacity declines.
"Travel managers identified the U.S. domestic market as the region with the largest spending cuts planned in 2009," he said. "Travel to Europe is expected to be cut sharply, but none of the respondents believe their firm's transatlantic travel spend will be down more than 20 percent."