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Report: Europe Travel Down for July; Airlines Struggle; UK Wins

August 17, 2012 By: Jena Tesse Fox

The latest Trans-Atlantic report is in for July, with some interesting results for the UK and the Continent.

Overall trans-Atlantic traffic was down in July, with the leading carriers reporting an average decrease of 1.3 percent. That extended the current period of little or negative growth into a fourth month, which several airlines have blamed on high taxes and fuel prices. The carriers reduced capacity by an average 1.7 percent and maintained a high average load factor of 88.9.

Lufthansa reported a profit of $270 million for the second quarter on revenue of $9.7 billion (+6.0 percent), but this was down 24 percent from last year’s $371 million profit. For the first six months, Lufthansa is still $270 million in the red thanks to a difficult first quarter. The long-ailing Austrian Airlines subsidiary turned in an operating profit for the second quarter.

Of the six leading trans-Atlantic carriers, only Star Alliance partners United and Lufthansa reported profits for the second quarter. Air France/KLM, Delta and American reported losses last month.

IAG (British Airways, Iberia and BMI) lost $116 million in the second quarter on revenue of $4.8 billion (+11.5 percent). Last year, IAG ran a profit of $46 million for the quarter. IAG said that Iberia’s traffic and yields are down because of Spain’s recession and Iberia’s “deep and structural” problems. IAG promised a “restructuring” of Iberia, including reduction of jobs.

And then there's the UK. The Olympic Games drew huge TV audiences worldwide, including in the U.S. (a record 41 million for the opening and a nightly average of 31 million), turning them, as VisitBritain Vice President North America Karen Clarkson told Travel Agent, into "the biggest TV commercial for Britain.” STR Global, meanwhile, is reporting a solid increase for London's hotels during the games, with an average occupancy of 88.5 percent, an increase of nearly 5 percent over the same days in 2011. According to Trans-Atlantic, however, London hoteliers say that foreign visits dropped below normal levels during the Games.

U.S. visits to Britain surged even more strongly in June than they had in May, and were up 7 percent for the year—four weeks before the Olympics opened. Americans spent $85.5 million with Visa cards throughout Britain during the first Olympic week, 68 percent more than Japanese visitors, the runners-up.

Looking ahead, VisitBritain plans new drives in the U.S. and other markets in partnership with airlines, tour operators and hotels built around promotional deals and good-value offers to London and throughout Britain.

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About the Author

Jena Tesse Fox
Jena Tesse Fox covers Europe, Africa, Australia/South Pacific and business travel for the Questex Travel Group's publications. The daughter of history teachers, she can spend...

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By Jena Tesse Fox | August 17, 2012
Trans-Atlantic travel was down for July, and airlines are still fighting to return to profitability. Meanwhile, the UK is capitalizing on the Olympic attention.
Filed under : Europe, Trends-Research