Asian travel on rebound at LAX.

Travel to and from Asia through LAX picked up markedly in the first quarter, reversing a three-year downturn and providing a potential lift for the local economy, according to travel agents and analysts.

The Asian market, a crucial element in the local tourism industry, fell sharply after the Sept. 11, 2001 terrorist attacks. It hit more turbulence around this time last year when the SARS outbreak and the war with Iraq put a virtual halt to cross-Pacific travel.

Los Angeles International Airport figures, which don't break down international destinations by region, show a nearly 5 percent increase in all foreign travel for the first two months of the year. However, there is agreement that Asia is driving much of the gains. Airlines report fewer empty seats to the region, and some carriers, such as American Airlines, have added flights.

"We are seeing a tremendous rebound in corporate travel to Asia," said Eric Maryanov, president of the All-Travel agency in Los Angeles. "It started right after the first of the year and has been steady ever since."

He said his company's bookings from the L.A. area to Asia nearly tripled in the first quarter, to $425,000 from $150,000 during the like period last year. The increase has primarily come from corporate clients, particularly telecommunications and computer companies. Apparel manufacturers also travel frequently to China to view upcoming product lines.

"Before we had people taking one trip per quarter," he said. "Now it's a lot of traffic back and forth. It's a huge pick-up."

Suzanne Newman, senior vice president of operations for Navigant International Inc., a travel management services company based out of Englewood, Colo., said the comeback is a product of economics.

"There's a tremendous amount of building development and the actual manufacturing of parts that happens in Singapore," she said. "As long as people buy those products here, there's a greater need to manufacture there and travel there."

Another factor, she added, is the increase in offshore outsourcing to Asia, which has increased the need for overseas travel as companies set up offices, hire workers and inspect products.

The leisure segment, which makes up about 40 percent of total travel to Asia, had been sluggish for almost three years, and is now showing improvement. "Vacation travel seems to be coming back with equal strength," Oliver said.

Brendan Climo, marketing manager for the United States for Flight Centre Ltd., said the company has been aggressively pushing Asian destinations, which make up 15 to 20 percent of the company's business.

And the results have been noticeable. In the first quarter, the company sent 300 passengers to Asia on Singapore Airlines and Cathay Pacific Airways--double the number from the like period last year.

"There's definitely an increase in leisure travel," Climo said from his Carson office. "We've been promoting that region in our press advertising and Web site. We've gotten a good response to some Beijing and Shanghai packages that we've been promoting recently."

Because traffic flows both ways, the Asian travel renaissance comes none too soon for hotels, amusement destinations and other travel-dependent sectors of the local economy. Leisure and hospitality is the fifth-largest employer in the L.A. County economy, after government, manufacturing, retail and health care, providing 359,000 jobs in 2003, according to the Los Angeles County Economic Development Corp.

Japan historically has been the largest source of overseas visitors to Los Angeles, but those figures have fallen by about half since 1997, said David Sheatsley, vice president of research at LA Inc., the visitors and convention bureau. Even with the drop, Japanese tourism contributed $178 million to the local economy in 2002, Sheatsley said, with leisure travel making up about 75 percent of the total. Figures are not final for 2003, but it's possible that Japan was overtaken by the U.K. last year for the first time, he said.

So far this year, LA Inc. has seen a decline in the pace of year-over-year decreases from Japan, Sheatsley said, after several years of double-digit drop-offs.

Airline cutbacks

The number of departing flights from LAX fell by 5.9 percent in 2002 after dropping 4.7 percent in 2001, according to the federal Bureau of Transportation Statistics. In the first nine months of 2003, the most recent figures available, LAX-Asia travel was tracking to fall another 4 percent or so lot the year.

That's clearly turned around.

American Airlines, owned by AMR Corp., launched its first-ever nonstop service between Tokyo and LAX on April 4, adding to existing nonstop flights from Dallas, New York, Chicago and San Jose.

Cathay Pacific Airways Ltd. restored its second daily nonstop from LAX to its Hong Kong hub last September when passenger demand picked up. Cathay had canceled the flight last April, when the city was hit by SARS (severe acute respiratory syndrome).

Shortly after the terrorist attacks, United Airlines cancelled its nonstop flight from LAX to Hong Kong and redirected the route with a stop in San Francisco. It also started serving its nonstop LAX-to-Tokyo route with a smaller plane with 253 seats instead of 347. But in the past few mouths, as passenger demand has rebounded, the airline brought back the larger plane.

Planes are more crowded now, too. American Airlines reported that the March load factor for flights to the Pacific (from all U.S. airports) was at 81.3 percent, a 15.8-point increase over March 2003. Europe was the only region that did better, as flights across the Atlantic had 82.8 percent of their capacity filled, on average.

United Airlines reported that the Pacific region saw a load factor of 86.5 percent, a 16-point increase over the year-earlier period.

"Travel to and from Asia will be the No. 1 area going forward," said Bill Oliver, an aviation analyst for Evergreen, Colo.-based Boyd Group "Asia has excellent growth even in down times compared to other markets. It will be one of the top markets in the world throughout out 2004."

Airlines are eager to add more flights to Asia, where profit potential is high, but restrictions--whether they're financial or bureaucratic--make the going stow.

The U.S. and Singapore governments brokered a so-called open skies agreement a few years ago allowing airlines from other countries unlimited access to both nations' airports.

Nonstop flights were 80 percent full during the month of February, according to Christopher Cheng, vice president of Singapore Airlines' southwest division. "This is the biggest we've ever been at Los Angeles with triple daily service," said James Boyd, spokesman for the airline.

No open skies agreement exists with countries such as Japan, Thailand and Hong Kong, so their governments control the number of flights coming in and out of their airports.

Many U.S. airlines have joint agreements with foreign carriers, essentially reducing them to the role of travel agents selling tickets for a percentage of the cut, while foreign carriers handle the transportation.

For its part, American Airlines had been planning the Tokyo routes for two years before the slumping economy and SARS gave them two years of cold feet.

"We had been looking at doing (nonstop Asia flights) for a while but the market conditions weren't favorable to start a new service like that," said Tim Kincaid, a spokesman for American Airlines. "It takes a while to build the traffic for that. It was post Sept. 11 and people just were not traveling, especially international."