Demand for transatlantic flights soars as Americans can't get enough of Europe

Norse Atlantic ASA

21/03/2023 14:21

By Rajesh Kumar Singh, Doyinsola Oladipo and Joanna
Plucinska
       March 21 (Reuters) - New Yorker Elizabeth Palumbi's list
of European cities to visit this spring keeps getting longer,
and she is not alone. 
    Online searches by Americans for flights to Europe trips are
surging despite soaring air fares, a worsening economic outlook
and risks of gridlock at some of the airports in Europe.
    The travel boom is promising record profit margins at some
U.S. carriers, which are ramping up transatlantic capacity to
cash in on Americans' thirst for travel to Europe.
    It also explains why U.S. carriers remain upbeat about
travel spending in spite of rising interest rates, high
inflation, mounting job losses and a global banking crisis.
    Industry executives said lifting of pandemic-related travel
restrictions in Europe is encouraging more people to travel as
they no longer fear getting stranded overseas if they contract
the virus. Travelers are also being emboldened by a strong U.S.
dollar and more flexible work arrangements.
    Palumbi, a 26-year-old meteorologist, intends to work
remotely and travel to Portugal, Southern France, and
Montenegro.
    "It's been impossible to open up social media over the past
couple of years without seeing at least a few friends posting
from Europe," she said.
    Online travel agency Hopper's March data shows 37% of
searches from U.S.-based customers for international travel this
spring are for flights to Europe, a 9% increase from the same
period in 2019. 
    Travel website Kayak said searches for travel to Europe this
summer are up 77% from last year. 
    There is still untapped travel demand for Europe even after
a busy summer last year, said Hayley Berg, lead economist at
Hopper. As a result, from late May through fall, the region has
become the top travel destination for Americans.
    It's a boost for Europe's travel industry, which is
grappling with cash-strapped domestic travelers looking for
cheaper vacations and lower-than-expected bookings from
high-spending Chinese travelers.
    Transatlantic travel is the industry's most lucrative
long-haul market, accounting for between 11% and 20% of
passenger revenue last year at the big three U.S. carriers:
American Airlines  AAL.O , Delta Air Lines  DAL.N  and United
Airlines  UAL.O .
    However, widespread labor strife in Europe, along with a
passenger cap at Amsterdam's Schiphol Airport, did not let
carriers fully capitalize on travel demand last summer. The
resulting flight cancellations and reductions in service,
particularly in Amsterdam, hurt Delta's earnings.
    Schiphol, one of Europe's busiest airports, has plans to
limit passenger numbers again this summer.
    Both Delta and United have said they expect record profit
margins this summer from the transatlantic market, without
offering more details.
    The three big U.S. carriers have increased transatlantic
capacity by 22% this year, according to aviation analytics
company Cirium.
    Some European carriers like Norse Atlantic  NORSE.OL  are
also trying to cash in. The Norway-based airline has plans to
add Los Angeles, San Francisco, Washington and Boston to its
summer schedule from London Gatwick airport.
    Average fare for a round-trip flight to Europe, meanwhile,
has risen 31% from last year, Hopper data shows.
    Palumbi has used airline miles and travel credit card points
to book her flights. But if she decides to change her return
flight, it could cost her up to $1,000, she said.
    U.S. airline executives warn prices are only going higher.
    "I would urge you to tell all your neighbors if they're
trying to go to Rome this summer, they better book early,"
United Chief Commercial Cfficer Andrew Nocella said.

 (Reporting by Rajesh Kumar Singh in Chicago, Doyinsola Oladipo
in New York and Joanna Plucinska in London; editing by Ben
Klayman and Jonathan Oatis)
 ((rajeshkumar.singh@thomsonreuters.com; +1-313-484-5370;
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