Falling demand sparks cut in capacity

<a href=news.ft.com>By Kevin Done, Aerospace Correspondent Published: March 25 2003 22:25 | Last Updated: March 25 2003 22:25

British Airways and Lufthansa, two of the top three European airlines, are cutting capacity, in particular on North American routes, in response to falling demand for air travel triggered by the war.

In further retrenchment in the European airline industry Swiss, Switzerland's national carrier, said on Tuesday that it was halving its firm order for 60 regional jets from Embraer, the Brazilian aircraft maker, to only 30 with first deliveries pushed back to next year.

It is also seeking to delay the delivery of five Airbus A340-300s from 2004.

BA is expected to announce on Wednesday a capacity reduction of close to 5 per cent initially until the end of April with a cut in daily frequencies to New York, to both JFK and Newark airports, and to Chicago.

It is expected to reinstate a daily service to Tel Aviv, however, after suspending its former twice daily service to Israel last week. The move will leave Kuwait as the only one of BA's Middle East destinations to which service remains suspended.

Lufthansa, the German flag carrier, said that it was cutting capacity on intercontinental routes mainly to North and South America and to Asia and would take seven aircraft out of service from its long-haul fleet.

The group is cutting one daily frequency from Frankfurt to each of New York, Boston and Los Angeles while individual flights will be scrapped to Phoenix and Dallas and smaller aircraft used to Philadelphia.

Frequencies to Caracas, Venezuela, will be halved from six to three a week, while capacity is being cut to Nagoya and Osaka in Japan and to Seoul, South Korea. Lufthansa had already moved in February to cut capacity on short-haul routes in Europe with 31 aircraft taken out of service in addition to the 17 removed by its regional airline partners.