U.S.-EU Discord Imperils Rebound in Prime Trans-Atlantic Flights
A delay in opening up travel between the U.S. and Europe would stunt a rebound in Aviation industry’s biggest profit generators.
(Bloomberg) -- A delay in opening up travel between the U.S. and the European Union would stunt a rebound in trans-Atlantic flights that are the industry’s biggest profit generators.
Carriers like British Airways and Delta Air Lines Inc. ply skies between North America and Europe that far and away comprise the biggest market for premium long-haul travel. Almost 40% more business- and first-class seats were sold on North Atlantic flights than the nearest contender last year, according to figures from OAG Aviation Worldwide.
The resumption of these lucrative routes is at risk as officials in Europe weigh concerns about Covid-19 infection levels in the U.S. The outbreak is retreating within the 27-nation bloc, which is developing criteria for lifting a curb on non-essential travel from July 1. The U.S. could be excluded because of the high level of new cases, and ongoing measures are likely to be reciprocated.
The EU recommendations won’t be binding on its members, and final decisions on whether flights are permitted are likely to come down to individual nations. Secretary of State Michael Pompeo said this week that the U.S., which has previously taken a tougher line on foreign arrivals, doesn’t want to put people off visiting and that a solution should be attainable in coming weeks.
Airlines are stuck in the middle. The chiefs of Delta, American Airlines Group Inc. and United Airlines Holdings Inc. are among the CEOs who were scheduled to discuss the matter at a meeting on air safety with U.S. Vice President Mike Pence on Friday.
In Europe, KLM chief Pieter Elbers said in a Bloomberg TV interview Friday that the the Dutch airline is relying on mandatory face masks, minimal interaction between crew and passengers, and advanced air filtration systems. “We are taking every measure we can to make flying as safe as possible,” he said.
British Airways owner IAG SA was the 2019 leader in trans-Atlantic travel. The airline’s service between London Heathrow and New York John F. Kennedy generated $1.2 billion in the year through March 2019 -- the only route globally to cross $1 billion, according to OAG.
Britain, no longer part of the EU, is due to provide an update on a 14-day quarantine requirement for incoming passengers on Monday, with the expectation that it will adopt so-called air bridges allowing unfettered travel from a limited number of countries, all of them initially likely to be in Europe.
British Airways operates a schedule that’s constantly shifting due to the virus, according to a spokesman, who declined to comment further.
Virgin Atlantic Airways Ltd. said it’s monitoring the situation. It’s due to resume flights to New York and Los Angeles on July 20, followed by San Francisco, Miami and Atlanta. Orlando, Florida, has been pushed back to Aug. 24 at the earliest, as it isn’t among 15 approved entry points to the U.S.
Joint Ventures
Air France-KLM, which has a revenue-sharing venture on trans-Atlantic routes with Virgin and Atlanta-based Delta, said it’s already serving four U.S. cities and plans to add three flights a day to Boston and San Francisco from July 6. A spokesman declined to comment on the possibility of curbs on flights remaining longer than expected.
Citigroup analyst Mark Manduca said an inability to operate premium long-haul routes could have a knock-on effect for short-haul flights in Europe that essentially exist to fill up bigger planes.
“If Frankfurt to New York isn’t taking off, there’s no need for Hanover to Frankfurt,” he said. “The short-haul planes have nothing to do.”
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