Devastation from September 11 attacks proving hard to remedy

Air travel to and from the United States has still not recovered from the September 11 terrorist attacks.

According to data from the US, total passenger travel to and from the country increased slightly last year to 104 million travellers but remained 13 per cent below the 2000 figure.

For routes into the mainland, Taiwan and Hong Kong, the likelihood of a return to the pre-September 11 norm was destroyed by the Sars pandemic.

As a result, passenger numbers between Hong Kong and the US fell 23.9 per cent last year and remain almost 30 per cent below pre-September 11 levels.

The smaller number of passengers flying between the mainland and US fell by the same percentage but a faster recovery has meant mainland-US traffic is only about 20 per cent below 2000 levels.

Despite these disappointing results, a fast recovery is expected this year, with passenger totals between March and July likely to show extraordinary growth when compared with the Sars-depressed traffic of last year.

Hong Kong may even grow fast enough to scale that 2000 peak.

bangkok bargains

Competition on air routes to and from Bangkok looks likely to intensify following the June start of flights from Macau by low-fare airline AirAsia.

AirAsia, like all budget airlines, sells one-way tickets, so the cost of a return flight could make a difference. Most 'regular' airlines promote round-trip fares and a one-way fare on such airlines may be two-thirds of the cost.

AirAsia's lowest fare from Bangkok to Macau is around $400, round-trip. That compares with about $2,000 to Hong Kong and back on Cathay Pacific and Thai Airways.

Singapore-based Valuair, which started flying to Hong Kong in June, is likely to be out-valued when low-fare airlines start competing on the route before the end of the year.

The airline is generally included in the budget category - partly because of its name and its statements concerning its business plan. But its fares are not at a level that would generally be considered 'low fare'.

Valuair charges about $1,500 for a round-trip flight, whereas a real budget rate should be less than half that.

tough times

Despite a slight 1.4 per cent increase in the stock market in June, results for travel-related stocks were not good. Six fell, two remained unchanged and only two increased.

According to our Travel Index, based on last December's prices, travel stocks at the end of June were at 106.

Business prospects are much better for this year, now that Sars is but a memory. However, the market seems to have already discounted this growth.

Of the two aviation stocks, only Cathay increased. The other, China National Aviation Co, includes that company's holdings in Air Macau and Dragonair and both airlines look very well positioned to capture large amounts of traffic growth from the mainland.

Among the six hotel stocks, only Hong Kong and Shanghai Hotels increased. Hong Kong-based, but Singapore-listed, Mandarin Oriental showed no gain, even though the Singapore market increased 2.8 per cent.

Prospects for the two other travel companies - China Travel (HK) and Star Cruises - should be better. Sars recovery, which started in earnest last June, has arguably been slower for these two than for other travel firms because bookings are usually made further in advance.

Just as mid-Sars cruise cancellations last May affected loads six months later, then post-Sars bookings restarting in June-July last year were for October travel.

As a result, business for China Travel and Star Cruises this year should show improvement over a longer period than that for other travel companies. The market, however, seems unimpressed with this possibility and has marked both stocks down.

Compiled by Murray Bailey, research director and editor, Travel Business Analyst