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ASSOCIATED PRESS
In this Thursday, Jan. 20, 2011 photo a Delta Airlines jet takes off at Boston's Logan International Airport. Delta Air Lines estimates 2011 revenue will be cut by $250 million to $400 due to the crisis in Japan. (AP Photo/Stephan Savoia)
Delta Air Lines Inc. will cut capacity on its Japan routes by as much as 20 percent through May, joining Asian carriers that have trimmed services after an earthquake and radiation leaks from a nuclear power plant.
The impact of Delta’s cuts in Japan service will be $250 million to $400 million, the carrier said today in a regulatory filing. Delta is suspending service to Tokyo’s Haneda airport and will continue serving Narita.
Singapore Airlines Ltd. will suspend one of its two daily services to Haneda from March 27, and Jetstar, the budget unit of Qantas Airways Ltd. will redirect half of its 14 weekly Tokyo-bound flights to Osaka, the carriers said. Cathay Pacific Airways Ltd., Korean Air Lines Co. and Singapore Air have ended temporary Tokyo capacity boosts as demand cools.
Carriers added seats out of the Japanese capital last week as overseas governments advised residents to avoid the city after the earthquake and an accident at the Fukushima Dai-Ichi nuclear power plant.
About $2 billion of Delta’s total revenue, or 8 percent, “touches Tokyo” and there has been “some drop-off in bookings,” President Ed Bastian said in a presentation during a transportation conference in New York hosted by JP Morgan Chase & Co.
The decline in travel demand to Japan is “somewhere between a 6- and 9-month one-time event” and will probably rebound when the government puts more money into the economy for rebuilding efforts, he said.
Delta, the world’s second-largest carrier, said it would reduce overall seating capacity by 4 percentage points in the second half of the year, especially in markets where “revenue has not kept pace with fuel” such as the trans-Atlantic. The Atlanta-based airline is cutting departures at its Memphis hub by 25 percent.
The company is retiring 120 of its least-efficient planes over the next 18 months, including DC9-50s and Saab turbo-props and 60 of its 50-seat regional jets, according to the filing.
For Delta, as well as American, United and Continental, the disruption to Japan service comes as high fuel costs have forced them to raise ticket prices and rein in spending. The airlines have implemented eight across-the-board fare increases so far this year; Delta led four of those. Fuel costs have tracked a 38 percent increase in the price of oil since Labor Day.
This is the second time this year that Delta, which is based in Atlanta, has cut back on its scheduled amount of flying. United Continental Holdings Inc., the parent of United and Continental, has also scaled back its plans.
The Associated Press contributed to this story.
