Tuesday, September 23, 2008

Delta Offers Double Miles to UK, France, As All Airlines Expect Softening on N. Atlantic Routes

Delta Air Lines is offering double miles for flights between New York or Los Angeles and London and, with code-share partner Air France, between New York and Lyon and Salt Lake City and Paris. The offer is good for flights through Dec. 15. Here are the details.

And here is my current take on the transatlantic market: Traffic is falling, especially on the U.S.-European routes and especially to London, including premium traffic. The breakdown on Wall Street and the resulting shock wave in London's financial markets have airlines that invested heavily in first-class and business-class capacity very, very worried because the financial industry has been the most resilient in buying premium seats.

Look for widespread business-class fare sales soon.

Delta itself admits that London is an industry problem. "Heathrow is a bit of a bloodbath currently," Ed Bastian, Delta's president and chief financial officer, said last week at the Calyon analysts conference.

However, Delta, which has been expanding its international capacity at a heady clip for a year, is in effect hedged somewhat against the ongoing softening on the North Atlantic routes with its concentration on routes to Africa, the Middle East and Latin America, which Bastian said have "dramatically higher growth rates" than the European market.

Delta's projections for the rest of this year continue the international expansion and the concurrent reduction in domestic capacity. According to Bastian, international capacity is up 15 percent and domestic capacity down 12 percent in the third quarter, which ends next week. For the fourth quarter, Delta projects international capacity to also be up 15 percent and domestic capacity down 14 percent. Comparisons are to the 3rd and 4th quarters, respectively, of 2007.


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