United Continental sees clear skies over China

08:42, July 26, 2011      

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Air travel demand between China and the United States will remain strong despite worries about economic weakness in both countries, said a top executive from the world's largest airline.

"Demand on our routes to China is strong. I don't see that slowing. They continue to be among our most important international routes. We expect the economic relations between the two countries will continue to grow over time," Jeff Smisek, president and chief executive officer of United Continental Holdings, Inc (UAL), said on Monday.

"Given the level of the demand, our assumption is that the Chinese economy will continue to grow in a fashion that exceeds the growth of most other geographies for a considerable period of time," Smisek added.

Chicago-based United Airlines and Houston-based Continental Airlines announced in May 2010 a $3 billion merger that created the world's biggest airline by fleet size. Currently, the two airlines continue to operate as separate subsidiaries of UAL, but they are expected to receive their single operating certificate from the US Federal Aviation Administration this year.

UAL currently operates 79 weekly nonstop US-to-China flights, far exceeding the frequency of other US and Chinese airlines.

All US carriers operating in China have added new services to the country this year as they vie for the upper hand in the world's fastest-growing commercial aviation market while travel demand picks up after the global financial crisis.

United launched daily nonstop flights from Los Angeles to Shanghai in May.

Delta Air Lines Inc started nonstop flights from Atlanta to Shanghai in June and from Detroit to Beijing at the beginning of July.

American Airlines Inc launched nonstop flights between Los Angeles and Shanghai in April.

China will be the biggest contributor of new air travelers by 2014, according to a report by the International Air Transport Association (IATA).

By 2014, the country is expected to be the world's fastest-growing market for international passenger traffic, with an annual growth rate of 10.8 percent, said the Geneva-based organization, which represents 230 airlines.

UAL reported a second-quarter net profit of $577 million on Thursday. Its fuel costs surged 45.2 percent year-on-year, or $1.1 billion, during the period.

"Our biggest challenge is the high cost of jet fuel. It is an extremely high cost and it is a volatile cost," Smisek said.

The company has been trying to lower the effect of high fuel costs by raising airfares, using derivatives and adopting more fuel-efficient aircraft, Smisek added.

The IATA more than halved its forecast for 2011 airline industry profits on the back of high oil prices in June. It expected the industry to have a profit of $4 billion in 2011, down from a forecast in March of $8.6 billion.

Source:China Daily
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