| Continental's
international business has blossomed since
it turned its focus to less-served cities
in Europe - Thanks for small favors
BRISTOL, ENGLAND -- Bristol International
is a small airport just outside this English
city, but its facilities -- and others
like it throughout the United Kingdom
and Europe -- have provided an opportunity
for Continental Airlines' recent growth.
Instead of concentrating solely on huge
tourist draws like London, Paris and Rome,
the Houston-based carrier has moved into
midsize cities, establishing nonstop links
between its Newark Liberty International
Airport hub and places like Bristol, a
growing business center with a population
of about 400,000.
In the last three years, Continental
has also added nonstop flights to Belfast
in Northern Ireland and Edinburgh in Scotland
as well as to new locations in Europe,
including Barcelona, Spain; Stockholm,
Sweden; and Cologne, Germany.
The strategy has given some European
cities a first-ever nonstop link to the
United States and has allowed Continental
to expand its European presence greatly,
despite its inability to get coveted landing
rights at London's Heathrow Airport.
"These routes are very strong,"
said James Summerford, Continental's vice
president for Europe, the Middle East
and Asia. "We really are turning
into an international carrier. We're getting
near the point where 50 percent of our
revenues are international. The expansion
is going fabulously well."
Continental's international performance
helped lift last year's third-quarter
revenue and income and will contribute
to what's expected to be a profitable
year when the carrier reports fourth quarter
and full year 2006 earnings today.
Summerford said the international expansion
plan, hatched 10 years ago, depended on
a $1.4 billion renovation of the airline's
facilities at Newark airport, the gateway
for most of the new routes. Executives
believed then that the revamped terminal
would give Continental a formidable launching
pad for going global, he said.
"We have a structural advantage
over other airlines that allows us to
hit a lot of these secondary markets,"
he said. "First, we have the only
hub in the New York City area, with Newark
Liberty. Second, we have the right kind
of aircraft for these small markets, the
Boeing 757-200, with 172 seats. It's great
for the thin market, and it's very economical
to fly. That makes routes work for us
that don't work for other airlines."
The airline's European network has grown
from five cities 10 years ago to 26 cities
today.
Howard Wheeldon, an airline specialist
at BTC Partners brokerage in London, said
Continental's strategy of moving into
places like Bristol may pay off and offset
the company's absence from London Heathrow.
"These places might not seem very
big to most of us, but they are very important
places for Continental," he said.
"They're growing at an equally fast
pace as larger airports like Heathrow.
If they play their cards right and choose
places wisely, I don't think it matters
if they're not in the center of London."
The process for Bristol was started by
Tony Hallwood, the aviation development
director of Bristol International Airport.
He convinced Continental executives that
the pool of travelers who would use the
airline for U.S. trips extended far beyond
Bristol.
Hallwood, who was also courting American
Airlines, argued that leisure travelers
and business people from a large, affluent
swath of southwest England would fly to
Newark with Continental if they could
leave from Bristol's airport and skip
the tedious drive to Heathrow.
"When we met with people in Houston,
we knew were on solid ground," Hallwood
said. "We knew there were over 300,000
trips taken to the States each year by
people flying out of London Heathrow who
originate in the southwest here. We knew
we could pull a lot of those customers
back with direct service to the States."
Hallwood's argument was buttressed by
the long list of international companies
in the Bristol area, including those with
trading ties to Houston, which would provide
a large number of travelers willing to
pay premium fares for Continental's BusinessFirst
service.
Airport authorities also offered Continental
incentives to begin service, including
an agreement to suspend landing fees for
the first three years.
The addition of Bristol-Newark service
also allows travelers to avoid the hassle
of dealing with Heathrow, an aging, overcrowded
facility where travel is frequently slowed
by long security lines and by foul weather.
James Cowling, business editor at the
Bristol Evening Post, said the addition
of the Newark nonstop provided a major
shot in the arm for the Bristol business
community and brought some U.S. tourists
into the region.
"There is so much potential for
growth on the back of the Continental
flight," he said. "The business
community was delighted because it cuts
time at both ends; they don't have to
drive to and from Heathrow, that saves
2 1/2 hours each way."
Similar logic applies to decisions to
expand to other smaller U.K. cities, including
Belfast, where the economy has been growing
steadily since the sectarian violence
subsided.
In the past, travelers from Belfast and
from Scottish cities like Edinburgh had
to take connecting flights to Heathrow
or to other European airports before tansferring
to U.S.-bound flights. Continental's nonstop
service has made that unnecessary.
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