Two airlines that only months ago won federal approval to begin highly coveted routes to China are postponing the launch of the new services because of high fuel costs.
The requests come at a time of growing strain on the airline industry, which is anticipating multibillion dollar losses this year as it scrambles to cope with runaway oil prices and a slumping U.S. economy.
United Airlines has sought and US Airways plans to ask for one-year delays in launching the new routes, representatives from the carriers said Thursday. United won final approval and US Airways received the tentative go-ahead to launch the routes from the U.S. Department of Transportation in September.
Since then, oil prices have shot up more than 60 percent. Benchmark prices surged past $135 a barrel Thursday before settling at $130.81, down $2.36 on the New York Mercantile Exchange.
The routes in question affect planned United service between San Francisco to Guangzhou, and US Airways flights between Philadelphia and Beijing.
Access to routes between the U.S. and China is highly competitive because air service between the two countries is restricted by bilateral agreements. A July agreement between the two countries was intended to double the number of daily flights allowed between the two nations over the next five years.
United’s request for a delay was approved April 25, while the request from US Airways has not yet been received, Transportation Department spokesman Bill Mosley said.
United, a division of UAL Corp., was scheduled to start its new flights in early June, but now plans to postpone the launch until June 2009. Spokeswoman Robin Urbanski said the Chicago-based carrier is scaling back plans for one new international route, San Francisco to Guangzhou, where there aren’t “strong enough economics” to offset higher fuel costs.
United received final approval for its route in September, the same time Delta Air Lines Inc. won the opportunity to launch its first flights to China with a daily route between Shanghai and Atlanta. Delta’s flights began March 31.
US Airways has begun sending letters to members of Congress and its employees saying it would seek to delay the launch of the new Philadelphia-Beijing route, noting that the cost for fuel would be more than $90 million a year — $40 million more than the original estimate of about $50 million.
“We’re optimistic that economic conditions will be on the upswing in 2010, giving us a better chance of success with our first route to China,” Scott Kirby, the president of Phoenix-based US Airways Group Inc., said in a letter to workers.
Sen. Bob Casey, D-Pa., said in a statement that the China route is a priority for the Philadelphia region, and that the delay was another example of how high fuel prices are hurting the economy.
“I hope this delay is only temporary because this route has the potential to be an economic boon to Philadelphia and good business for US Airways,” Casey said.
Before it began the process of delaying the launch, US Airways had planned to start its new route in 2009.
US Airways received final approval for the route in December. At the same time, AMR Corp.’s American Airlines, Continental Airlines Inc. and Northwest Airlines Corp. each won awards to add a new daily flight to their existing service beginning next year.
Representatives for American, Continental and Northwest said they are not making any changes to their plans for new China passenger routes next year.
However, Northwest has applied for a waiver to suspend seven weekly roundtrip cargo flights a week between Tokyo and Guangzhou, China, spokeswoman Tammy Lee said.
Source: Yahoo news
Sign In
May 24, 2008 at 7:16 am