"Pacific air routes still have not recovered from SARS"

Monday, August 25, 2003

Pacific air routes still have not recovered from SARS
By Edward Wong
The New York (NY) Times 


SAN FRANCISCO - The disease had run its course, as far as Peter Chu was
concerned. 

Sure, the respiratory illness known as SARS had sown fear throughout Asia in
the spring. But Chu was now determined to take his wife, Rose, and
4-year-old son, Michael, back to Taiwan for a visit. 

"They haven't found a new SARS patient," said Chu as he and his family
waited at San Francisco International Airport on a recent afternoon for a
flight to Taipei on EVA Airways, the Taiwanese airline. "So we think there
will be no effect on us." 

But not everyone shares his bravado. Chu, who moved here three years ago to
work as a loan officer for a Taiwan bank, said his older brother and two
co-workers had canceled their annual trips back to Taiwan. 

Summer usually is the peak period for trans-Pacific travel, when immigrants
visit friends and family, and tourists flood streets from Beijing to
Bangkok. But the region remains far more depressed in terms of air travel
than any other part of the world. 

Passenger traffic plummeted on lucrative trans-Pacific routes at the height
of the SARS scare in April and May. It has recovered somewhat - monthly
traffic numbers no longer are as far below last year's figures as they once
were - but travel across the Pacific continues to lag travel in all other
regions. 

What is more, the Bush administration's decision on Aug. 2 to bar many
passengers from catching connecting flights in the United States without
having to get entry visas will cut into another source of revenue for some
airlines. Industry experts said flights that would be most affected are
those passing through the United States on trips between Asia and Latin
America. Passengers unwilling to go to the time and expense of getting a
U.S. visa probably will catch flights that connect through other countries,
like Canada. 

The Air Transport Association, the industry's main trade group in the United
States, estimated that travelers connecting through the United States under
two programs giving them permission to enter without visas accounted for
$150 million of revenue last year. While that is less than 1 percent of
total industry revenue, the figure will undoubtedly decline just as airlines
are scrapping for every dollar they can find. 

In addition, rising anti-Western violence in parts of Asia, illustrated by
the recent bombing of a Marriott hotel in Jakarta, Indonesia, will continue
to scare off some tourists. Business travelers are not returning as quickly
as airlines hoped, and some who had canceled trips during the SARS scare
could decide now that they can continue to substitute telephone or video
conferencing for face-to-face meetings. 

Though traffic numbers have shown some improvement lately, much of this
travel was stimulated by cutthroat deals on plane tickets, so revenue will
continue to lag. 

"Tickets to Taiwan are usually $700 round trip," said Jennifer Wong, 37, a
loan consultant also waiting to catch the EVA Air flight here with her two
children. "This year, I got a $540 ticket from a travel agent in San Jose
(Calif.). Some friends got deals with hotel stays." 

Trans-Pacific traffic in July for the major U.S. airlines was down 13
percent compared with the previous July, said John Heimlich, an economist
for the Air Transport Association. That was a far larger drop than the
systemwide decrease of 2 percent, though it was an improvement over the
decline of about 40 percent at the height of the SARS scare. 

"At this point, it's as much general malaise as it is residual effects of
SARS," Heimlich said. 

United Airlines, which relies on Asia travel for nearly a fifth of its
revenue and uses San Francisco as its trans-Pacific gateway, reported that
its Pacific traffic in July was down 22.1 percent from a year ago. That is a
significant improvement over April and May, but still much worse than its
5.7 percent system-wide decline. 

Richard H. Anderson, chief executive of Northwest Airlines, which is
United's main American rival on trans-Pacific travel, said he expected a
double-digit decline in passenger boardings in August. 

"While we've seen recovery, it's difficult to see significant recovery at
this point from SARS," Anderson said. 

The summer months "are typically the strongest travel months," he added.
"But the booking period for June, July and August was right in the middle of
SARS."


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