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Airlines, Airports Cater to International Travel

Changi Airport in Singapore.
Piotr Powietrzynski | Photographer's Choice RF | Getty Images
Changi Airport in Singapore.

For many U.S. airlines, flights that cross oceans and continents have fast become as important as those that cross the country.

U.S. airlines increasingly are looking abroad to make money, as the demand for international travel skyrockets, and the race to woo domestic fliers gets tighter and tougher.

Carriers are adding routes that crisscross the globe, even as they pare the seats available for passengers flying coast to coast. They're spending millions to upgrade international terminals, filling their fleets with jets better able to make long-distance trips, and adding bed-like seats and other perks to make a flight across time zones as comfortable as possible. (Read more: Delta Joins Other Airlines to Offer Lie-Flat Seats)

"The airlines are focusing on where they can make money," says Brett Snyder, founder of the travel-assistance website and blog The Cranky Flier, who has watched airlines target the international market in recent years.

The airlines' shifting focus dovetails with a desire by many cities to become or maintain their dominance as international gateways that are able to attract foreign travelers whose dollars can jolt local economies.

In the last six months, Las Vegas and Atlanta have opened new international terminals or gates. Construction is underway at New York's long-neglected JFK International airport, and Southwest is preparing to build a new international terminal at Houston's Hobby airport. (Read more: Glitzy New Terminal to Open at Las Vegas Airport)

Cities such as Las Vegas and Denver are courting airlines to get flights that will appeal to companies doing business abroad, and they're increasing their advertising in other countries to entice foreign visitors.

For airlines struggling to deal with volatile fuel prices, international flights are a particular boon to the bottom line.

When it comes to what they earn vs. what they spend, they make out better flying long distances rather than shorter domestic routes. Business travelers, who might be OK with a seat in coach to fly from Boston to San Francisco, are often more willing to pay top dollar for a business-class seat from New York to London.

"A lot of it is driven by where we see the opportunity," says Chuck Schubert, vice president, network planning for American Airlines. He anticipates that American, which is restructuring under bankruptcy protection, will increase its international service from roughly 28 percent to 45 percent of its flights in coming years.

Coming and Going

A global economy that knows no borders has helped spur the boom in international travel, which has exploded in the last two decades.

A report released in October by the Brookings Institution's Metropolitan Policy Program found that the number of international passengers flying to and from the U.S. rose 117 percent to 163.7 million, from 1990 to 2011, compared with a 53 percent increase to 638.2 million, in domestic passengers in the same span.

That gap in growth isn't likely to shrink soon. An industry forecast from the trade group the International Air Transport Association expects the number of domestic passengers in the U.S. to grow 2.6 percent a year from 2012 to 2016, compared with a 4.3 percent annual increase in international fliers during that period.

"If you look back over the last five to seven years, you can see a definite shift in capacity from domestic to international," said Bob Cortelyou, Delta Air Lines' senior vice president for network planning.

Delta had wide-bodied aircraft that it was able to switch from domestic routes to international markets, not only in Europe but in Africa and Latin America, Cortelyou says. The airline's merger with Northwest in 2008 enabled it to add routes into Asia. Now, roughly 43 percent of Delta's flying is international, vs. 23 percent in 2005.

Domestic flying remains important for airlines and plays a key role in their international service, as they funnel passengers from points across the U.S. to their hub airports, where they can hop flights to other countries, says airline analyst Robert Herbst.

But the domestic market is a crowded field. Large network carriers such as American, United, US Airways and Delta are vying for domestic passengers against lower-cost carriers such as Southwest, which flies more domestic passengers than any other. Even niche upstarts such as Spirit, with its rock-bottom fares, peel off some frugal fliers on select routes.

"The domestic market is a very mature market and a very competitive market, as well," says American Airlines' Schubert. "You have new entrants like Spirit and JetBlue ... and the more traditional legacy carriers vying for a market that's growing a couple, maybe 3 percent a year, vs. international markets that are growing substantially faster."

Airlines and airports are trying to appeal to international travelers with new routes, new jets, upgraded terminals and in-flight perks.

Delta, for instance, is helping foot the $1.2 billion bill to renovate a terminal at New York's JFK. It will be home to Delta's international flights when completed in May and will feature the airline's biggest Sky Club, complete with showers and massage suites. (Read more: Delta's New York Fliers Get an Upgrade)

Meanwhile, JetBlue began work on expanding its international terminal at JFK in October.

U.S. carriers also are taking advantage of alliances and joint ventures with their international peers to cut costs and more efficiently move passengers across the globe. "We have our own," says Delta's Cortelyou, "but we also have our partners aircraft to get our customers to wherever they want to go."

Delta's partnerships with Air France and Dutch airline KLM effectively give it hubs in Paris and Amsterdam, Cortelyou says. Delta passengers headed to other international destinations can fly to those cities, then complete their journeys on Delta's partner airlines.

Delta's new routes and flights starting next year include a non-stop between Newark and Paris, and summertime flights between Boston and Paris, and New York's JFK and Amsterdam.

"There's global growth but also cost pressures such as fuel that have made some longer, thinner routes less economical," Cortelyou explains. "It makes more sense to bring (passengers) through hubs in Paris and Amsterdam," particularly during certain seasons.

Eight years ago, JetBlue launched its first international flights into Nassau in the Bahamas. Since then, it has used its strong presence in cities such as New York, Orlando and Boston as jumping-off points for increased service throughout the Caribbean and Latin America. It now flies to 23 international markets, as well as three destinations in Puerto Rico, and has increased its international flying from 14 percent in 2008 to 27 percent in 2012.

When JetBlue starts flying the more fuel-efficient Airbus A320Neo aircraft in 2018, it will be able to fly farther into South America, says Scott Laurence, JetBlue's vice president of network planning and partnerships. The airline's making it easier for some foreign fliers to travel the U.S. by offering lower fares and the ability to pay for a ticket with cash.

Airlines also offer plush amenities to lure international travelers.

"Airfares are pretty much the same from airline to airline," industry analyst Herbst says. "You go from New York to London, you'll probably find the same fare on United or Delta. ... Now, they have to compete (with) amenities, whether it's frequent-flier programs or better seats in first-class cabins."

One of the more popular offerings is bed-like seats in a jet's premium sections. United boasts that it has the largest fleet equipped with the flat seats. On Nov. 1, it began offering turn-down service in its Global First cabin. By the end of 2012, it will become the first U.S. carrier to offer in-flight Wi-Fi globally.

"We're adding products for both domestic and international," says United Network Vice President Brian Znotins. "But when you're taking a long trip, some of those things have greater impact than they do for domestic."

Importance of Access Grows

Access to foreign cities can be critical to a city's economic future. Denver city officials watched a locally based corporation pull up stakes last year and relocate to San Francisco because Denver did not have a non-stop flight to Asia at the time.

"We lost a global headquarters," says Denver Mayor Michael Hancock.

City and airport officials lobbied for years to get such service, and were finally successful. In March, United will begin flying non-stop from Denver to Tokyo, a route that Hancock says is estimated to have an annual economic impact of more than $130 million on Colorado. (Read more: United Airlines to Fly Denver-Tokyo Nonstop)

Besides that economic windfall, Hancock says, the new service means the city is now "able to say we have a non-stop flight to the largest economy in the world, and our goal is to attract new companies that will relocate to Denver."

Las Vegas is also in hot pursuit of foreign traffic. Roughly 15 percent of the fliers passing through the city's McCarran International Airport are international travelers, with 7 percent flying into Las Vegas directly. That's in comparison with 1990, when a few seasonal charters were the only international flights flying into the tourist hub, says Randall Walker, director of the Clark County Department of Aviation, which operates the airport.

Now, international travelers will be able to make their way through a new $2.4 billion terminal, which opened its seven international gates in June.

"We're certainly not one of the very large international arrival destinations, but it's been a rapidly growing segment of our traffic," Walker said.

Las Vegas tourism officials hope to increase the share of international travelers from 16% to 30% of its roughly 39 million annual total visitors within the next decade, said. Cathy Tull, senior vice president of marketing for the Las Vegas Convention and Visitors Authority.

"The international visitor is really the growth opportunity for us," she says, noting that they're fine-tuning advertising campaigns abroad. "The international visitor plans further ahead ... they spend more money and they tend to stay longer."

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