Business Travel News - March 29, 2010 - (Page 20)

Carriers Restoring Hong Kong Capacity BY SETH HARRIS A fter radically cutting seat capacity on direct routes to and from the United States and Hong Kong last year, carriers have begun to put capacity back into the market, which has shown a rebound in the early part of 2010. Travel to the Asian city rose considerably in January year over year, with visitors from long-haul markets up 18.7 percent and Americas visitors increasing 16.9 percent, according to the Hong Kong Tourism Board. Overall, visitors were up 5.9 percent. While the capacity comeback in the first half of the year on flights to and from the United States can satisfy some of the improved demand, the new available seat capacity dwarfs the amount taken out in the first half of last year, which totaled 20 percent of all seats, according to OAG. Cathay Pacific Airways is increasing its seat capacity about 10,000, or 7.2 percent, to just shy of 149,000 on the Los Angeles-Hong Kong route, according to OAG data. On its flights to and from San Francisco, the carrier is raising seat capacity at a similar rate. The airline’s New York-Hong Kong route capacity is flat compared with the first half of last year. Overall, the Hong Kong home carrier last year reduced its direct U.S. seat capacity by 50 percent. Delta Air Lines is initiating direct service from Detroit with 5,796 seats during the first half of the year. United Airlines, which last year discontinued its Hong Kong service out of Los Angeles International Airport, is holding its capacity flat compared with the first six months of 2009 on its San Francisco and Chicago routes to the city. Continental Airlines is reducing its seat capacity to Hong Kong from its Newark hub by less than 300 seats, keeping overall capacity relatively flat. The lone carrier to materially reduce serving Hong Kong from the United States directly, Singapore Airlines, is cutting seat capacity by more than 1,100 seats. The demand comeback in the waning months of 2009 and first few of 2010 already has driven carriers to raise fares on Hong Kong flights, according to some travel management company executives. HRG Hong Kong general manager Joe Birrell said the “majority of the airlines are increasing their fares by 10 percent to 15 percent, especially on major routes.” He noted that airlines, including Cathay Pacific and regional carrier Dragonair, and Europe, albeit in lower numbers than peak times,” said Fraser. “Negotiations are strengthening as corporate clients are recommencing their usual business travel patterns of 2008, albeit they are traveling further down the back of the plane.” Business travel demand growth also has impacted room rates in Hong Kong, where occupancy levels stayed relatively robust in 2009 compared with other corporate travel hub cities. According to the Hong Kong Tourism Board, weak long-haul business travel SHUTTERSTOCK implemented stricter restrictions in ticket cancellations and changes. Vice president of supplier relations Noah Tratt said Egencia’s 2010 forecast released in the fall so far has held true: Average ticket prices are 1 percent higher on North America-originating flights to Hong Kong. FCm Travel Solutions executive general manager of Greater China David Fraser said that the average trip cost in Asia/Pacific in 2009 decreased $273, 31 percent less than 2008. Although business travelers are returning to the skies, they continue to downgrade their class of service, according to Fraser. “Since mid-to-late 2009, we definitely saw increases in corporate travel and more specifically corporate buyers returning to long-haul travel from the U.S. led to a decline in overnight visitor arrivals in 2009. Average hotel occupancy in all categories was 78 percent last year, down from 85 percent in 2008. Upper-tier hotels, where Western business travelers tend to stay, averaged 72 percent occupancy, a 7-percentagepoint difference from the year prior. Those numbers have surged this year. In January 2010, occupancy in all hotel categories reached 87 percent, up from 79 percent in January 2009. However, the rise in occupancy levels has not driven average daily rates higher. Egencia’s Tratt said average daily rates in the city in 2010 were in line with its earlier forecast to receive a 4 percent drop year over year. HRG’s Birrell also said corporate clients have secured lower average daily rates for 2010. ■ 20 CORPORATE TRAVEL INDEX 2010 www.BTNonline.com March 29, 2010 http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - March 29, 2010

Business Travel News - March 29, 2010
Table of Contents
Domestic Corporate Travel Index
Per Diems In 100 U.S. Cities
Alphabetical List Of U.S. Cities
Hotel Costs In 100 U.S. Cities
Food Costs In 100 U.S. Cities
Car Rental Costs In 100 U.S. Cities
City Profiles - Beijing
City Profiles - Hong Kong
International Corporate Travel Index
International Methodology
Per Diems In 100 International Cities
Alphabetical List Of International Cities
Hotel Costs In 100 International Cities
Food Costs In 100 International Cities

Business Travel News - March 29, 2010