For Airlines, The Money Is Overseas

Even as they struggle mightily at home, airlines that fly to Europe and Asia are seeing some of their highest passenger loads and revenue in years. That's good news for the airlines; not so good for business travelers.

Many airlines saw demand for flights to Asia last year drop off significantly due in large part to the weakened economy and severe acute respiratory syndrome. European flights were affected by the Iraq war.

Now U.S. businesses seem to be making up for the drop-off. According to a recent survey of the 2,500 business travel managers who make up the Association of Corporate Travel Executives, 69 percent said their companies are doing more traveling to Europe and Asia this summer than last.

And since low-fare U.S. carriers aren't yet flying to Asia or Europe, the carriers that are can charge some premium rates. United Airlines' revenue per passenger mile to Asia, for example, increased 57 percent last month from the same period last year. In the travel manager survey, 62 percent of those who responded said they were having trouble finding low fares.

Marcella Axley, travel manager for Fair Lawn, N.J.-based Lonza Inc., said that her company is doing about 25 percent more international flying this year compared with last and that fares are about 10 percent higher.

She said her biggest challenge is finding business-class seats, especially on flights to China, where the chemical manufacturer has a plant. And because Lonza didn't do much international flying last year, Axley said, the company doesn't have negotiated rates with the airlines.

Schneider Electric, in Palatine, Ill., is requiring its employees who fly to Asia and Europe to book as many as 21 days in advance if they want to fly business class. "There's not always availability if you book within seven days," said Schneider's travel manager, Amanda Jackson.

Jackson said the company is doing 70 percent more flying to Asia this year and 30 percent more flying to Europe. To offset its growing international travel demand, Jackson said, the company is reducing the amount of domestic travel.

Last month, United saw its highest revenue and passenger loads ever on flights to Asia. "Over the last two or three months, we've been very surprised," said Graham Atkinson, senior vice president of United's worldwide sales and alliances.

Atkinson said most of its flights to Hong Kong and China from the United States have been more than 80 percent full. In June, due to the increased demand, the airline launched three new flights to Beijing, Osaka and Zurich from San Francisco, Chicago and Washington's Dulles International Airport, respectively.