Delta Air Lines Faces $100 Million Summer Loss as Travelers Avoid Paris

• Delta Air Lines expects a $100 million loss due to travelers avoiding Paris this summer, except for Olympic-related visits.
• Paris hotel prices are set to surge up to 45% in July and August, deterring mid-summer travel.
• Travelers are increasingly opting for European trips in September and October, avoiding peak summer crowds.

For more than 10000 Olympic athletes, making it to Paris this summer will be the ultimate goal. But, many potential tourists aren’t so sure.

Delta Air Lines reports that passengers are opting to stay away from Paris this summer and choosing other cities instead. The pattern is likely to cause a $100 million cost for the airline in the otherwise bustling European tourism season, as per CEO Ed Bastian.

The third quarter earnings and revenue forecast was below Wall Street expectations after airlines expanded the amount of flights. However, Delta has reiterated its year-end outlook on Thursday.

“Unless you’re going to the Olympics, people aren’t going to Paris … very few are,” Bastian said. “Business travel, you know, other types of tourism are potentially going elsewhere.”

Delta provides the highest services towards Paris of all U.S. airlines and holds an agreement with Air France. Together, they control around 70 percent of the nonstop market in both the U.S. and France, according to the consultancy company ICF. The 1st of July Air France KLM, Air France’s parent company forecasted an increase in revenue of around 180 million euros ($195.5 million) between June and August, due to the Olympic Games.

“International markets show a significant avoidance of Paris,” the company said. “Travel between the city and other destinations is also below the usual June-August average as residents in France seem to be postponing their holidays until after the Olympic Games or considering alternative travel plans.”

Bastian expects a huge market demand for Paris post-Olympics travel, which are scheduled to begin on July 26 and run until August 11. “During the period itself there’s a little bit of hesitation,” Bastian explained. Air France KLM also has the same view.

A major deterrent to the mid-summer season towards Paris is the predicted increase in the cost of hotel rooms. A hotel data firm STR forecasts that revenues per available room at luxurious hotels in Paris can increase up to 50% between July and August as compared with the same timeframe in the year before. Contrastingly, London and Rome are likely to only see a 3 to 5 percent and 2% – 4% growth according to the same measure for these months.

A lot of travelers have already shifted their European holidays beyond the typical vacation time of summer According to Delta’s President, Glen Hauenstein. The shift gives airlines the chance to earn more money in the absence of busy seasons.

Hauenstein has also observed a rise in the number of travelers to Japan in part due to the favorable exchange rate that is favorable for U.S. tourists.

“When the yen was 83 [per U.S. dollar], it was very difficult to be able to afford to go see Japan and all the great things that Japan has to offer. With the yen at 160, it’s a very different world for U.S. travelers and they seem to be taking great advantage of that,” he said.