[bvpcvm]

http://blog.oregonlive.com/business_impact/2009/07/lufthansa_to_end_portlandfrank/print.html

Lufthansa will end Portland-Frankfurt flight

Posted by goliver (http://www.oregonlive.com/business/index.ssf/about.html) July 06, 2009 14:29PM

http://blog.oregonlive.com/business_impact/2009/07/large_lufthansaclosure.JPG

Stephanie Yao Long/The Oregonian

Port of Portland maintenance employee Heinrich Gerke and his four-year-old son Samuel, both German citizens, had their picture taken by Suzanne Miller, right, of the Port of Portland, during the arrival of Lufthansa's inaugural flight into Portland International Airport in March 2003.
Portland International Airport managers, dismayed that Lufthansa is suspending PDX-Frankfurt service in September, plan to pay Delta Air Lines to keep flying to Tokyo.

A Deutsche Lufthansa spokesman confirmed Monday that the German airline would halt its flights to Frankfurt after Sept.12, saying the nonstop service was losing money. The 6-year-old route, the airline's only PDX flight, fell victim to the global recession, Lufthansa's financial woes and competition from Delta's Portland-Amsterdam service.

Managers of the Port of Portland, which operates the airport, confirmed Port commissioners would vote Wednesday on a proposed $3.5 million payment to Delta. Under the agreement, which involves no tax revenues, Delta would promise to keep daily flights through May between PDX and Japan's Narita International Airport.

Port officials' eagerness for the unprecedented cash deal shows the high priority they place on international service. Delta's Tokyo flights pump more than $60 million a year into the regional economy, according to the Port, keeping Portland on the world map for business and leisure travel.
"It's unique, but this is a time to be aggressive," Bill Wyatt, Port of Portland executive director, said of the emerging Delta deal. "There is reason for optimism that this will bridge us to a time when the economy improves."


http://blog.oregonlive.com/business_impact/2009/07/small_luft.JPG (http://blog.oregonlive.com/business_impact/2009/07/luft.JPG)
JAMIE FRANCIS/THE OREGONIAN

Lufthansa will end nonstop flights between Portland International Airport and Frankfurt, Germany, as the airline slashes costs worldwide amid slumping demand. The final flights will be Sept. 12.

Port managers want to avoid a return to the days early this decade when PDX -- once an Asian gateway for Delta -- kept the "international" in its name only by virtue of short hops to Vancouver, B.C.

Port and business leaders scrambled to recruit international carriers in 2002, landing Lufthansa, which launched the next year. The Port offered risk-mitigation and marketing-support packages to any airline that would restore nonstop service to Asia.

Northwest Airlines responded, launching Tokyo service in 2004. Last year, Northwest started its Amsterdam flights. Delta inherited those routes when it acquired Northwest last October.

However, PDX is handicapped by its relatively small market.

Portland is the smallest U.S. nonhub market with transoceanic service to both Europe and Asia, according to David Zielke, the Port's general manager for air-service development.

The nine-member Port commission will vote on the Delta deal during its monthly public meeting, which will begin at 9a.m. Wednesday at the agency's headquarters, 121 N.W. Everett St. Port managers will offer a similar deal to any other carrier willing to start daily nonstop service between Portland and Asia.

Managers figure that by investing in Delta's Tokyo flights, they also will encourage the Atlanta-based airline to keep its Amsterdam service. Planes can hop from the Pacific route to the Atlantic one and back.

"It's a good business decision on the Port's part and on behalf of the community," said Portland travel executive Sho Dozono, who co-chairs the International Air Service Committee. The panel, headed by Dozono, Wyatt and Ted Cullen, Nike Inc.'s global travel and events director, helps attract and retain international carriers.

Dozono, Azumano Travel president and chief executive, said fears of swine flu have compounded travel-industry troubles this year. Those fears caused a dozen Japanese tour groups to cancel on Azumano this summer.

The recession has forced Delta to suspend international service between U.S. airports and Frankfurt. Seoul, Shanghai, London and Edinburgh.
"Delta also recently informed the Port of Portland that its international gateway flights were at risk," the air-service committee co-chairs wrote in a memo circulated Monday.

Separately, Lufthansa notified the Port last weekend that it would suspend Frankfurt service after final flights Sept. 12. "It was really not an easy decision for us," said Martin Riecken, Lufthansa corporate communications director.

The airline will consider reinstating the service next year, but for now the flights lose money, Riecken said. The Port had already waived landing fees for nonstop planes arriving from overseas. Lufthansa and Port managers did not discuss potential additional incentives, Riecken said.

"Our flights were never empty," Riecken said. "But the question is really how profitable the revenue is from those passengers."

Larry Maile, of the Portland agency Travel Cuts, said Lufthansa's departure will hurt.

"People really loved that flight," Maile said. "It's nice to be able to take that 10-hour flight right to the heart of Europe, and then get a short little hop to your final destination."

Travelers already booked on Lufthansa flights after Sept. 12 will probably be rerouted through Seattle, he said, where the airline also offers Frankfurt service. Alternatives are Delta's Amsterdam route or a five-hour flight to the East Coast followed by a seven-hour flight to Europe.

Airline analysts expect Lufthansa to cut costs by as much as $1.4 billion when it announces measures July 30 to address collapsing demand.

Germany's largest airline also is trying to acquire ailing Austrian Airlines, subject to European antitrust clearance.

U.S. airline managers had hoped that deep cuts in flying this year would increase revenues. Carriers have managed to keep their planes about as full this year as last, but revenues per seat flown have dropped.
-- Richard Read; richread@aol.com (richread@aol.com)

Categories: Aviation (http://www.oregonlive.com/business/index.ssf/aviation/), Breaking News (http://www.oregonlive.com/business/index.ssf/breaking_news/), Business (http://www.oregonlive.com/business/index.ssf/business/)

[pdxtraveler]

I knew this was coming from the day they announced service to Seattle. Darn it all!! I never got to fly the route, I really wanted to!

[bvpcvm]

I flew it twice and it was packed both times. At least we still have the KLM (Delta) flight to Amsterdam. Presumably there's less chance it will be cancelled, since they'll pick up most of Lufthansa's customers. On the other hand, it wasn't lack of customers that brought down the Lufthansa flight; lately when I've checked ticket prices it seemed to be running about $450 RT. Hard to make money with tickets that cheap.

[WonderlandPark]

And LH used an A340, most inefficient airplane in the modern sky. No surprise that they pulled out. PDX is such a marginal market, SFO to the south SEA/YVR to the north. PDX doesn't have anywhere near the feeder/corporate HQ market that a somewhat similar sized city like DEN has. Or is a huge tourist magnet like Vegas is. In this downturn, I would not be surprised at all if all intercontinental service from PDX went away, at least for a while.

[MightyAlweg]

I never understood how those flights made sense, even in boom times. I'm surprised they lasted as long as they did.

I wouldn't be surprised to see the Delta flights to Tokyo and Amsterdam to be gone by this winter.

[Aya Murase]

sad. does this mean pdx = podunk? we have to layover to get ANYWHERE.

[pdxtraveler]

I never understood how those flights made sense, even in boom times. I'm surprised they lasted as long as they did.

I wouldn't be surprised to see the Delta flights to Tokyo and Amsterdam to be gone by this winter.

The Port of Portland is going to pay them to stay.

[202_Cyclist]

Air hubs pay to keep their spokes

Millman, Joel
Wall Street Journal

http://online.wsj.com/article/SB124718465623720407.html?mod=googlenews_wsj

PORTLAND, Ore. -- Portland is one of a handful of cities willing to pay big bucks to keep it connected with the rest of the world.

Port officials in Portland, Ore., say direct Tokyo flights generate $61.2 million in annual economic impact to the region.
The city's port authority voted this week to make a one-time cash payment of $3.5 million to Delta Air Lines Inc. to maintain the city's only direct link to Asia, a daily nonstop flight to Tokyo that the carrier had planned to terminate in September.

Deutsche Lufthansa AG confirmed this week that it would end its Portland-Frankfurt route in September because it wasn't profitable, leaving Delta's nonstop to Amsterdam as Portland's sole direct link to Europe. Last year Portland lost its only scheduled nonstop service to Latin America, a Mexicana Airlines flight to Guadalajara.

Smaller cities are ramping up subsidies to keep airlines from cutting routes as a stiff recession sends air traffic tumbling. "Airports are desperate," said Brian Busey, co-leader of the aviation practice at the law firm Morrison Foerster LLP in Washington.

Incentive programs have become increasingly common in recent years as airports and communities recruit carriers to fly routes that wouldn't otherwise be profitable. A longstanding federal program also provides funding to connect small cities by air.

But the Portland pact with Delta points to a new trend in which airports are giving away money to simply retain airline routes rather than recruit new ones. The direct payment also departs from typical deals that waive landing fees, share in marketing expenses or provide revenue guarantees.

Peter Kirsch, a partner at Kaplan Kirsch & Rockwell LLP in Denver, said his law firm is advising "several" U.S. airports on possible retention deals with airlines on domestic and international routes. Portland's pact extends Delta's Tokyo service until May.

In lobbying for the deal, Port of Portland officials said direct Tokyo flights generate $61.2 million in annual economic impacts to the region, helping local companies more effectively compete in the global marketplace.

David Zielke, Port of Portland's manager for air services, told port commissioners the pact would allow Portland to continue being the country's smallest city with both trans-Pacific and trans-Atlantic air links. The city has about 575,000 residents, with a metro-area population of more than two million.

Recession-battered airlines are expected to post $9 billion in losses globally this year, including a $1 billion loss among North American airlines, according to the International Air Transport Association. Passenger revenue globally and in the U.S. fell about 30% in May from a year earlier.

Airlines are continuing to scale back flights to trim losses. Seat capacity has shrunk by more than 5% since last year. But midsize airports have suffered a particularly steep falloff in international passenger traffic. Scheduled cross-border flights at such U.S. airports -- including Portland's -- are down 25% this month from a year earlier, according to the Airports Council International-North America, an umbrella group for airports.

Major airlines' traffic through Portland declined nearly 6% last year to less than 10 million passengers, said Bill Wyatt, executive director of the Port of Portland. Through the first six months of 2009, traffic was down 13% from a year earlier, he said.

Tucson International Airport in Arizona is weighing an incentive program to try to restart cross-border flights. Despite its name, the airport hasn't had any international routes since Aeromexico stopped flying to Hermosillo, Mexico, in September.

Myrtle Beach International Airport also doesn't have any international flights, but it hopes to attract some new cross-border routes through an incentive program that was renewed last month and offers steep fee discounts. Allegiant Air launched domestic service to the South Carolina beach resort this spring after accepting such incentives.

Pittsburgh International Airport inked a pact with Delta in February to launch service to Paris -- the city's first direct European link in several years. To attract Delta, the airport authority agreed to waive landing fees for two years and kick in $300,000 in marketing funds. A local economic-development group provided revenue guarantees.

Such incentives are "especially important given the current economic recession," said Deborah McElroy, a vice president of policy in Washington at Airports Council International, the industry group.

To pass muster with the Federal Aviation Authority, Portland wasn't allowed to use airport revenue to pay Delta. The money will come from general funds of the Port of Portland. It also would have to offer the same financial support to any other carrier that wants to offer the service.

[MightyAlweg]

Thanks for the WSJ link 202Cyclist!

Apparently Delta is operating that PDX-NRT route with a 767, the smallest plane to fly transoceanic routes. According to the Delta website, the 767 on that route is only a two-class set up, with Business Class and Coach offered, instead of the standard three-class intercontinental service on 777's or 747's they offer out of the normal Asia hubs like Sea-Tac, SFO or LAX.

So, considering that this is a comparitively small jetliner that Delta has running the PDX-NRT route, and that it's only set up for a two-class service with no high profit but high risk First Class available, perhaps Delta Airlines stands a chance in sticking around for another year or two with a 3.5 Million dollar subsidy compliments of the Port of Portland?

It's a very interesting arrangement however, to say the least. :rolleyes:

Delta Airlines, We're Ready When You Are! (Especially if you pay us 3.5 Million dollars)

[202_Cyclist]

I was surprised that a 767 can fly nonstop from PDX-Tokyo but Boeing lists the range for the 767-200ER as 6,385 nmi (http://www.boeing.com/commercial/767family/pf/pf_200prod.html) and it is 4822 miles from PDX to Narita (http://gc.kls2.com/cgi-bin/gc?MAP-STYLE=&MARKER-STYLE=default&PATH=PDX-NRT&PATH-COLOR=red&PATH-MINIMUM=&PATH-STYLE=&PATH-UNITS=mi&RANGE=&RANGE-COLOR=navy&RANGE-STYLE=best&SPEED-GROUND=&SPEED-UNITS=kts)

[MightyAlweg]

Yes, it is surprising how far such a relatively small plane can fly. You generally think of 767's as making the Chicago to Dallas milk run.

Boeing designed the 767 in the late 1970's as a replacement for the aging 707 fleet. The 200ER version was primarily considered for secondary trans-atlantic routes, like Miami to Paris or Boston to Dublin. But it can also be used on trans-pacific routes, if the loads are light enough.

I do believe the PDX-NRT route that Delta has going thanks to a generous contribution from the Port of Portland is likely the only trans-Pacific route currently using a 767.

Asiana, All Nippon, Thai Airways, Singapore Airlines, China Eastern, Cathay Pacific, Eva Air, Japan Airlines, Korean Air, Air Tahiti, Air Pacific, Air New Zealand, Qantas, V Australia, Air Canada, Varig, United, American Airlines, and Continental all seem to be using big 777's, 747's, A340's, or double-deck A380's to get from West Coast cities to Asian cities.

[WonderlandPark]

Air Canada uses them trans-pacific out of YVR. I booked one to Seoul once (I had to cancel later)

[MightyAlweg]

Air Canada uses them trans-pacific out of YVR. I booked one to Seoul once (I had to cancel later)

You're right, it looks like Air Canada is flying a 200 seat 767 on the Vancouver-Seoul route. On the Vancouver to Tokyo route they've got a 265 seat A330 flying daily.

[WestCoast]

the lufti flight depended on cargo and biz class travelers to make ends meet.

Businesses cutting travel is brutal on such a long thin flight.

If PDX had more tourism, more businesses, then we would have long haul service.


Took the LH flight twice to Frankfurt and back. Was just amazing both times.
Not looking forward to having to take Delta with such an inferior product.

Do hope LH comes back in a year or two as things pick up.
That was easily the best flight out of Portland.

[202_Cyclist]

Complaints make Portland-Tokyo flight bumpy for Delta

by Richard Read,
The Oregonian
September 03, 2009


Satoko Nielsen caught a nonstop flight from Portland to Tokyo in July, finding the video displays broken for the ride of more than 10 hours.

The Northwest Portland resident's daughter took the same Delta Air Lines flight a few days later. It departed three hours late. On the return trip, her tray table was broken.

Passengers grumble about glitches on the nonstop Tokyo service, even as the Port of Portland pays Delta $3.5 million through May to continue the route. Port managers urge travelers to support the flights, which they say Portland is lucky to have as airlines slash connections vital for international business.

Delta is hanging onto the route as the company continues updating interiors of the planes that fly it, an airline spokesman says. "We're doing everything we can to preserve service amid the worst economic environment for the airline industry in decades," says Trebor Banstetter, corporate communications manager at Delta headquarters in Atlanta.

Airport managers nationwide strive to preserve international routes for more than just prestige. Nonstop flights carry traders, investors, tourists and cargo that shower economic benefits on communities.

Once a city loses international routes -- as Portland did in 2001, when Delta ended Portland-Japan flights -- they are difficult to restore. Deutsche Lufthansa will suspend its nonstop flights between Portland and Frankfurt after Sept. 12. The silver lining, travel agents say, is that Delta's flights between Portland and Amsterdam should attract more passengers.

Delta, encouraged by the unusual subsidies that kicked in Tuesday, has so far spared Portland International Airport the fate of cities such as Atlanta, Cincinnati and New York, where the airline has cut some foreign nonstop flights.

Delta is trimming international capacity by 15 percent as it takes over Northwest Airlines. Northwest launched the Portland-Tokyo service in 2004.

Pilots say Delta lacks spare parts in Portland for the Boeing 767s that now fly the route. So parts must come from Atlanta or Los Angeles or from other airlines.

Teams of video technicians work in Atlanta and New York, pilots say. So repairs often must wait until planes pass through those cities.

Delta pilots say they don't see signs of skimping on maintenance or safety across the airline's network.

The Japan-America Society of Oregon has expressed concerns to Delta about the Portland-Tokyo service, says Paul Taylor, the organization's chairman. "But overall the message to Delta has been one of support as we look for ways to jointly improve the situation," says Taylor, partner at Taylor Global Law Office in Lake Oswego.

Other leaders in Portland's international business community avoid even slightly negative statements for fear of undermining the route or offending Delta's brass.

Many of the service complaints come from frequent fliers who miss the Airbus 330 jets that plied the route until June. Delta cut about 30 percent of its costs that month when it replaced the 330s with the smaller Boeing 767s.

Bill Wyatt, executive director of the Port of Portland, which operates the airport, says only a "real geek" would know the difference between a Boeing and an Airbus. He acknowledges the 767s are older, with smaller video screens and seats that aren't quite flat.

"I feel unbelievably fortunate that we're still in the game," Wyatt says, however. "We're now the smallest market in the U.S., and the smallest in Delta's service, that has nonstop service to both Europe and Asia. We're the only non-hub they have that flies both directions."

The 767s on the daily PDX-Tokyo route do double duty, also flying between Portland and Amsterdam. Delta will reduce the nonstop Amsterdam flights from daily to four times weekly during the winter off-season.

Delta won't disclose how full the planes are on either route. Wyatt says only that passenger counts are "high" on both legs.

Some passengers actually prefer the 767s, which pilots consider dependable.

Portland soy-sauce magnate Junki Yoshida, a former Port commissioner, is the type of customer prized by airlines -- flying frequently to Japan and back, always in business class. He says the Airbus seats, while wider, were upholstered in slippery leather, sending his body into an uncomfortable slide.

The business-class food is better these days, Yoshida says, and the 767 bathrooms are bigger. "Now," he says, "I love the bathrooms."

Delta has made improvements on the ground in Portland, chiefly to preserve jobs. On Aug. 3, the airline ended outsourcing at airport ramps, staffing cleaning and baggage crews with airline employees. Such so-called ramp stations generally yield better, quicker service.

Delta, which has 340 employees in Portland, bases flight attendants here. But pilots who fly nonstop between Portland and Tokyo's Narita International Airport hail from other Delta bases such as Atlanta and Cincinnati. In October, they will start coming from Los Angeles.

The Port's Wyatt predicts the Portland-Tokyo flights will survive. He expects Delta will upgrade the route one day to Boeing's next-generation 787 Dreamliner jets. Delta could base international pilots in Portland again someday.

Meanwhile passengers such as Nielsen, the Northwest Portland woman left without video service, say Delta crew members apologize and hand out vouchers for $50 off subsequent tickets.

Nielsen changes planes at Tokyo's Narita for Nagoya, Japan, near where her family lives. The 46-year-old translator plans to continue using the nonstop Tokyo flights. She prefers their convenience to connecting initially through a U.S. airport.

Nielsen says she didn't crave movies on her July flight. Instead she enjoyed sitting beside a friend for almost 11 hours.

"It actually didn't matter to us," she says, "because we were busy talking."

[tworivers]

Seattle just picked up IcelandAir and a nonstop Reykjavik flight.

Right after losing SAS and a nonstop to Copenhagen. Delta canceled the new London service that NWA had initiated, too.

Of course they still have Paris, Amsterdam, Frankfurt, Paris, and London via BA. Not to mention a bevy of Asian connections Portland can only dream of. :)

[Okstate]

I can't believe how many flights Iceland has with Europe/Canada/US. The tourism industry must be much greater than I had thought. Especially not bad considering Iceland as a country has less population than Eugene's MSA.

[rsbear]

I can't believe how many flights Iceland has with Europe/Canada/US. The tourism industry must be much greater than I had thought. Especially not bad considering Iceland as a country has less population than Eugene's MSA.

I'm betting they are hubbing with those flights. There is no way there is enough traffic from Seattle to Iceland to support a flight.

[maccoinnich]

Yeah, it's as a hub. Icelandair also offers stopovers in Iceland for no extra cost, and one way flights at around half the price of a return. (Most carriers charge a small fortune for one way flights.) Both of which make Iceland an attractive hub. Especially when many transatlantic flights go over Iceland anyway.

[MarkDaMan]

I've booked my boss on a flight to Reykjavik and I have to tell you, the airfare on IcelandAir from Seattle is phenomenal.