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Oil Stunts US Air's Growth in China

CHARLOTTE, N.C. -- Skyrocketing oil prices have led US Airways (LCC) to seek a delay in launching its prized Philadelphia-Beijing service.

US Airways was among the winners when the transportation department awarded new China routes to all six legacy carriers in September 2007. But now, it wants to delay the flight -- originally expected to start in the spring of 2009 -- until spring 2010.

All of the five remaining legacy carriers already operate on at least one China route.

"The extension request is a response to record-high fuel prices and fuel's impact on the economic feasibility of this route," President Scott Kirby said Thursday, in a letter to employees. At today's prices, fuel for the flight would be $90 million a year, about $40 million more than US Airways expected to pay when it filed for the route.

"This extra fuel cost will make this flight uneconomic in 2009, especially if the economy and travel demand softens," Kirby said. "We're optimistic that economic conditions will be on the upswing in 2010, giving us a better chance of success with our first route to China."

Last week, the transportation department approved a similar request by United (UAUA) to delay by one year a planned San Francisco-Guangzhou route, also awarded in September and scheduled to start in 2008.

Also because of high fuel costs, Northwest (NWA) has suspended cargo service to Bangkok and Singapore and plans to suspend service to Guangzhou and Taipei this summer.

However, during the past month, Delta (DAL - Get Report) began Atlanta-Shanghai passenger service, while Northwest said it will begin Seattle-Beijing flights in March 2009, with a route authority it now uses to fly Tokyo-Guangzhou. The authority permits a flight that originates in the U.S.
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