IN the current tough environment, airlines are being forced to adjust capacity and tighten cooperation with other carriers to survive.
And now, faced with fluctuating oil prices and turmoil in the global economy, many airlines are suspending their expansion plans and cutting capacity.
The world's largest carrier American Airlines has recently applied to the United States Department of Transportation to suspend the launch of its Beijing-Chicago route from April 7, 2009 to April 4, 2010.
It is not the first case of a US carrier deferring US-China routes. United Airlines has also put back its Guangzhou-San Francisco route to spring next year, a year later than scheduled.
"We can't launch the new route under the current economic environment as it requires significant costs and investments in advertising, marketing and infrastructure," said Theo Panagiotoulias, vice president of Asia-Pacific for American Airlines.
"The China-US route is one of the longest routes for us and the percentage of its fuel cost is much higher than other shorter routes, so it's a reasonable decision to suspend it," Panagiotoulias told Shanghai Daily yesterday.
China remained a great opportunity for American Airlines and the airline would still cooperate with local carriers such as China Eastern Airlines to cover more destinations even without the new route, he said.
The carrier would stick to a hub-to-hub strategy which could be more competitive than some direct flights, Panagiotoulias said. Partnering with Dragonair in Hong Kong and China Eastern on the Chinese mainland would both help it tap into the Chinese market, he said.
The carrier said it also planned to cut capacity by 9 percent to minimize costs, but the reduction would target frequency rather than destinations. American has also completed installation of the next-generation business class on all of its Boeing 777 aircraft to grab slowing numbers of business clients, he said.
Cathay Pacific Airways last week also expressed its concern over the sagging market and said it would broaden its sources of income and reduce expenditure.
The Hong Kong-based carrier had reallocated resources to put more aircraft on high-demand routes and reduced capacity on slack routes, it said.
"Although the global markets have weakened, there are still some rising markets that we can pay attention to such as India, Mid-East and Australia," said Patrick Yeung, general manager of Cathay Pacific China.
The group also plans to add one flight to its Shanghai-Hong Kong route next year.
It has raised ticket fare by 3 percent to 15 percent on some golden routes to boost revenue, which grew about 22 percent in the first half of this year.
The carrier has also carried out cost savings measures across the board, including ordering 46 energy-efficient jets to phase out old aircraft, adopting lighter dining cars which can save 250 kilograms for long-haul routes, using lighter containers, and carrying fewer beverage. However, one airline ?? US carrier Continental Airlines ?? is bucking the trend. It will launch its first daily non-stop flight from Shanghai to New York on March 26, 2009.
The carrier said despite problems plaguing airlines, it would target the booming tourism market between China and the US.
The US Department of Commerce has estimated that 579,000 Chinese tourists will visit the US in 2011, up from 320,000 last year.
"There is no daily non-stop flight between Shanghai and New York, the two biggest aviation markets in China and the US, so we believe our new route will be a success," said Mark Erwin, president of the carrier's Asia-Pacific region.
China Eastern has run four weekly flights on the route since 2006.
"We believe that Shanghai has a booming demand from business clients as a financial center and these clients can fly to more than 60 cities via our hub in New York," said Erwin.
The load factors for its Hong Kong-New York and Beijing-New York flights have been between 80 percent and 90 percent. The carrier said it was confident the Chinese market would continue to grow. Passengers, This Is A Boarding Call
Passenger volume and load factor for China's three largest carriers in August:
Air China, the country's flagship international carrier, delivered 2.77 million passengers in August, dropping 16.6 percent from a year earlier.
Its load factor decreased 13 percentage points to 71.1 percent.
China Southern Airlines, the country's largest carrier by fleet size, handled 4.98 million passengers in August, down 16.17 percent from a year earlier.
Its load factor dropped 8.73 percentage points to 71.69 percent.
China Eastern Airlines, the country's third-largest carrier, transported 2.92 million passengers in August, diving 23.06 percent from a year earlier.
Its load factor dropped 8.63 percentage points to 69.43 percent.
The weak performance has largely been blamed on tightened visa regulations during the Beijing Olympic Games.