O’Hare International Airport is feeling the impact of ongoing tensions between Washington and China.
U.S. and international carriers have cut flights from O’Hare to Beijing—as well as other Asian destinations such as Tokyo, Seoul and Hong Kong—by 19 percent compared to a year ago, according to data from air travel intelligence company OAG. Aviation industry insiders are concerned that this decreased international business travel might be an early warning sign that the longest economic expansion in American history is coming to an end.
“The year-to-date Asian traffic (from O’Hare) through the end of August is down on the order of 20 to 25 percent,” said John Smith, CEO of business travel agency Tower Travel Management. “Stretching out to the last eight or 12 months, there is definitely a decreased focus on travel to Asia within our customer base.”
The number of nonstop flights from O’Hare to East Asian cities fell to 347 a month in October from 430 in October 2018, according to OAG. Most recently, United Airlines dropped its nonstop service to Hong Kong in early September. American cut most of its nonstop routes to East Asia late last year, and the company is not planning to bring those flights back. The airline handed those frequencies back to the Department of Transportation in June.
These numbers are going to drop further to at least 310 flights a month by April 2020. South Korean carrier Asiana Airlines is dropping its nonstop service to Seoul from Chicago at the end of this month, while American will terminate its remaining three weekly services to Tokyo’s Narita Airport by the end of March.
Jonathan Guerin, a United spokesman, said the airline is going to use smaller, lower-capacity aircraft for routes to China this winter “to address the continued weak demand trends.”
Along with the decreasing demand for business travel, Smith said he is also witnessing a buying down in seat classes to premium economy rather than business class. This decrease in travel spending from corporations foreshadows a recession, warned Joseph Schwieterman, a public policy professor at DePaul University.
“Business travelers, especially high-class travelers, are a strong indication of what’s to come in months,” said Schwieterman.
Manufacturing activity in the U.S. contracted for two consecutive months in September and recorded the lowest in 10 years. The ISM index released Oct. 8 fell to 47.8 in September, from 49.1 in August. Numbers below 50 indicate contraction, while those above point to expansion. It has been 18 months since President Donald Trump imposed a unilateral 25 percent steel tariff aimed at China, and American manufacturers are finally feeling the squeeze as exports are sharply declining.
International cargo tonnage, another leading indicator of business cycles, has steadily declined since January, according to the Chicago Department of Aviation. The year-to-date international cargo tonnage as of June declined by 3.21 percent, while the number of international cargo operations dropped further, by 11.31 percent.
“The cargo market is on decline from year to year between Asia and North America,” said John Grant, a senior aviation analyst at OAG. “When that happens, it’s a very good indicator that the global economy is slowing down quickly. It’s been a slow, consistent decline over the last 12 to 15 months.”
Another factor that contributes to reduced nonstop service to Asia from O’Hare is “network rationalization,” said Grant. Airlines are moving their limited international flight slots at O’Hare to other more lucrative destinations, mostly to cities in Europe, at the expense of their capacity to East Asia. From Chicago, the demand to Europe remains steady and even growing, while that to Asia is stagnating, and airlines are making choices to better accommodate the market.
“In Chicago, we are shifting our focus from connections across the Pacific to connections across the Atlantic,” said American Airlines spokeswoman Gianna Urgo.
United Airlines announced in August that it will add year-around nonstop service to Zurich from O’Hare starting at the end of March. American Airlines also recently launched new service to Barcelona, Venice and Athens from Chicago and is starting new service to Eastern European cities like Prague and Budapest next summer, according to a statement. LOT Polish Airlines is also adding a new nonstop connection to Krakow.
“The only places that (the demand) is holding up would be Europe,” said Smith from Tower Travel.
U.S. carriers serving Asian cities are moving away from O’Hare and adding nonstop service from their West Coast hubs instead, said Grant. United is adding two nonstop connections from San Francisco to both Hong Kong and Seoul, after dropping its Hong Kong service to Chicago. American Airlines is putting new routes to Tokyo Haneda from Los Angeles, Las Vegas and Dallas.
“United operating from the West Coast is a safer bet,” said Schwieterman, the DePaul analyst. “Chicago isn’t ideally positioned for Asian services.”
International travelers at O’Hare are more business-focused than those from other cities, he said. For Asia flights, Chicago is also relatively disadvantaged to Dallas or Houston in offering connections to other smaller cities. These characteristics of Chicago traffic could explain why U.S. cities far from the West Coast—such as New York, Dallas and Washington, D.C.—still manage to retain most of their services to Asia. The number of flights to Asia from New York’s John F. Kennedy International Airport remains virtually unchanged from October 2018 to October 2019 at around 570 flights a month, according to OAG.
“Chicago routes would naturally be more business-oriented than other entertainment centers or (tourist destinations),” said Schwieterman.
Matthew McGrath, a Chicago Aviation Department spokesman, said O’Hare still remains one of the most connected airports in the U.S. to Asia, despite recent changes in service.
“By early 2020, Chicago will still have the most nonstop seats to Asia in any midcontinent hub and the fourth-most in the U.S., only behind Los Angeles, San Francisco and New York’s John F. Kennedy,” he noted.