Asian Turbulence Creates Bargains for Air Travelers

The economic and currency upheaval roiling Asia is causing financial turbulence for U.S. and foreign airlines that serve the Pacific. But it’s also creating travel bargains for consumers.

“Business is not good,” said Kevin Murphy, airline analyst at Morgan Stanley, Dean Witter, Discover & Co. And the airlines’ Asian dilemma “hasn’t yet reached a trough,” he said this week.

Pacific passenger traffic is down sharply within Asia and between Asia and the United States because the economic troubles and currency declines in Japan and other Asian nations have prompted Asians to cut back on their air travel.

The slide in air traffic from the United States to Asia hasn’t been as severe, partly because U.S.-based travelers still benefit from the dollar’s strength against the weakening Asian currencies.

The economic problems overseas also mean that “hotel prices [in Asia] are down and air fares are under pressure,” said Scott Mowrer, U.S. sales manager for Cathay Pacific Airways of Hong Kong. “It’s a pretty good time to be shopping for bargains to and from Asia.”

Cathay is among the Asian-based carriers that are hurting. Others include Japan Air Lines, Korean Air, Singapore Airlines and Malaysian Airlines.

“All the Asian carriers face the same problem,” said W.S. Hong, Korean Air’s vice president of passenger marketing.

The U.S. carriers suffering the most are Northwest Airlines Corp. and UAL Corp.’s United Airlines unit, the two dominant U.S. airlines serving the region. Declines have been particularly evident in the number of Asian tourists visiting Hawaii and the mainland United States, where Los Angeles and San Francisco are gateway stops.

And matters are only getting worse because now South Korea’s economy is in trouble. A look at global stock markets says it all: Korean Air’s stock has plunged more than 40% since late July and Japan Air is off 25%. The stocks of UAL and Northwest, meanwhile, have both skidded 15% during the last four weeks.

Cathay Pacific has an added problem because “five months following Hong Kong’s hand-over to the Chinese, air travel to that former British colony has remained at severely depressed levels due to political, cultural and commercial uncertainties,” said Michael Lowry, publisher of the newsletter AirWatch Report.

The airlines’ struggle is a boon for travelers.

Some savvy fliers making round trips between the United States and Asia are “splitting” their tickets to take advantage of the U.S. dollar’s strength against Asian currencies.

They fly to Asia with a ticket purchased with dollars, then come home with a ticket bought overseas with the weaker currency. The tactic saves them hundreds of dollars compared with buying a round-trip ticket in dollars only.

The drop in airline traffic, and a parallel rise in the availability of hotel rooms in Asia, is also prompting the airlines to offer attractive fares and vacation packages.

Japan Air is offering discounts of 15% or more on certain executive- and economy-class tickets and on trips to Hawaii. Korean Air recently slashed fares from Los Angeles and 10 other U.S. cities to Seoul and a dozen other Asian destinations, with the round-trip Los Angeles-to-Seoul fare dropping as low as $699.

And Cathay Pacific this month offered round-trip air fare for two between Los Angeles and Hong Kong, plus five nights at a hotel in Hong Kong, for $999. The promotion was expected to last two weeks but sold out in four days, Mowrer said.

Times staff writer James F. Peltz can be reached at james.peltz@latimes.com