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United Air chief sees glimmer of hope

By Lu Haoting (China Daily)
Updated: 2009-04-09 07:46

The Sino-US aviation market is likely to witness a recovery in business travel demand by the middle of this year due to increased corporate activity to stimulate economic growth, a top executive of a leading US airline said yesterday.

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"Our corporate customers need their sales people to conduct business and look for new market opportunities. The airline industry will be a beneficiary of, if not economic growth, the efforts to stimulate growth in a difficult economy," said Glenn Tilton, chairman and CEO of United Airlines.

Tilton made the remarks on the sidelines of the three-day 2009 US-China Aviation Symposium hosted by the Civil Aviation Administration of China and the US Trade and Development Agency.

Chicago-based United is the world's largest transpacific passenger carrier between China and the US.

United has reduced capacity on routes to Beijing by 28 percent by shifting from flying the Boeing 747 to the smaller B777 airplanes.

The airline also temporarily suspended the Washington-Beijing nonstop service for the month of February. Besides, it plans to defer the start of a nonstop service between San Francisco and Guangzhou until next year.

"These are temporary decisions, for what we expect will be a temporary market condition and should not be seen as a sign of retreat or a lack of confidence in the US-China market in the near term," Tilton said.

The International Air Transport Association said recently that international air travel demand to and from China is expected to contract by between 5 and 10 percent over the year due to the economic downturn in the country's major trading partners such as the United States and Europe.

"That is only temporary," said Li Lei, an aviation analyst with CITIC China Securities.

"Over the mid- to long-term, we will still see strong passenger growth on routes between China and the US," said Li, adding that passenger traffic between the two countries has been posting double-digit growth in recent years.

Tilton said the current global economic downturn makes aviation partnerships more crucial than ever.

The US Department of Transportation on Tuesday approved the request of United and Continental Airlines to form a trans-Atlantic joint venture that includes Lufthansa and Air Canada.

Besides sharing revenues, the airlines will pursue joint cost-saving initiatives in areas such as information technology platform, frequent flyer programs, reservations, catering and procurement of commodities, Tilton said.

United has been providing ground service at Shanghai Pudong International Airport to Continental's latest nonstop flight between New York and Shanghai since March.

United's parent UAL Corp reported a loss of $5.35 billion in 2008, returning to the red after a 2007 profit of $403 million.

Bloomberg News yesterday reported that United will open talks this month with unions representing 88 percent of its employees, which is the first contract bargaining since exiting bankruptcy in 2006.