KLM, the Dutch airline, today joined other carriers in cutting flights to New York and within Europe as the travel industry took an early hit from the outbreak of war in Iraq.
The airline and travel sectors are more vulnerable than other industries to war and the cuts by European, Asian and US carriers are a bitter pill at a time when they are still struggling to pull out of a two-year downturn.
The big carriers, such as American Airlines and British Airways, have yet to recover fully from the disastrous impact on air travel from the September 11 attacks.
With industry forecasts calling for a fall in demand of as much as a fifth in the US market, the world's largest, US carriers have already cuts in flights and jobs. Transatlantic bookings, as in the 1991 Gulf war, are expected to suffer most.
American Airlines said that it would cut international flights by 6% in April, including flights to Europe and Latin America.
As the world's largest carrier struggles to stave off bankruptcy, its chief executive, Donald Carty, told employees: "Even as we keep working, day in and day out, to keep this company afloat, we will have to trim some capacity as prices and supplies are impacted by the war."
United Airlines, which is already bankrupt, has warned employees of unpaid leaves and capacity cuts, while Air Canada said that the war underscored a need to cut 3,600 of 40,000 workers this year.
Meanwhile, travel agents have seen a significant drop in bookings for the summer. The Association of British Travel Agents (ABTA), whose members account for 90% of UK travel agents, said that UK bookings were down 15% in February on the same month in 2002, while bookings in January, the most important month for summer bookings, had been down 7% on the previous year.
"Not very surprisingly, during times of conflict, people don't tend to think of going on holiday. We probably won't see growth overall in the package holiday sector this year," said Frances Tuke an ABTA spokeswoman
The industry will be keeping its fingers crossed that travel will pick up if the conflict in Iraq ends quickly. A recent Mori poll indicated that 17% of travel buyers intended to go abroad this year but would not commit themselves until hostilities were over. This same poll showed that only 4% of travel agents' customers were "very unlikely" to leave the country. But even though sentiment has not collapsed, even the most optimistic firms do not see much of a pick-up from a weak 2002.
MyTravel, the package tour operator said yesterday that winter bookings were 4% down on last year, despite a 4% cut in capacity.
"The uncertainty over the conflict in Iraq, together with fears of terrorist attacks within our departure countries have significantly affected our customer bookings during what is normally a peak booking period," Peter McHugh, the chief executive, told a subdued annual general meeting in Manchester.
MyTravel caters for the budget end of the market, but the more upmarket operators are also feeling the pinch. Club Med said this week that sales were slow because of war fears.
Henri Giscard d'Estaing, chairman of Club Med, said that his firm would consider delaying the opening of its resort villages, or even closing them temporarily for renovation. Germany's TUI, the largest travel firm in Europe, recently said booked travel for the current year was down by 6%.
