Transatlantic Airlines Face Heavy Losses As Tourists Avoid Paris Due to the Olympics
Major airlines claim the Paris Olympics are hurting their sales, with some predicting hundreds of millions in losses due to the summer games. In a bid to avoid crowds and congestion, tourists are cutting back on travel to Paris altogether, according to leaders of Delta Airlines (DAL), Air France and Air Canada, which are respectively the official airlines for Team U.S.A., France and Canada.
Air Canada yesterday (Aug. 7) revealed that the Olympics had dented its quarterly profits, which fell by 51 percent year-over-year to 410 million Canadian dollars ($298 million). “Core Europe, markets like France and Germany where there’s a significant point-of-sale Europe component, that was quite weak,” said Mark Galardo, Air Canada’s head of revenue and network planning, during the company’s second-quarter earnings call. “The Olympics and a bit of the Euro soccer tournament all contributed to some of those declines.”
Delta echoed these concerns during its quarterly earnings call in July. The financial impact of the Paris Olympics is expected to be responsible for some $100 million in losses as European travel slows this summer, said the airline’s president Glen William Hauenstein, who predicted a “robust fall demand” would return after the event finishes.
“Unless you’re going to the Olympics, people aren’t going to Paris,” Delta CEO Ed Bastian told CNBC, which noted that Delta operates 70 percent of nonstop flights between the U.S. and France (through a joint venture with Air France). “Business travel [and] other type of tourism is potentially going elsewhere,” added Bastian.
Team France’s official airline could lose nearly $200 million
Air France is expected to lose nearly twice as much revenue as Delta from the Olympics. Air France-KLM, the parent company of Air France, last month announced that it expects the event to negatively impact revenue between June and August by 160 million euros ($175 million) to 180 million euros ($196 million). “International markets show a significant avoidance of Paris,” said the company in a press release. Air France-KLM also noted that travel is down for French residents, who “seem to be postponing their holidays until after the Olympic Games or considering alternative travel plans.”
It isn’t just European flights that are hurting this summer. Hotel occupancy rates in Paris have reportedly decreased by almost 25 percent compared to previous years, with visitors turned away by high premiums connected to the Olympics. The lagging demand last month caused hotels to slash prices for accommodation during the Olympic games to an average of 313 euros ($342) a night , marking a 41 percent decrease from a previous peak rate of 531 euros ($580).
Despite the international appeal of the Olympics, the sporting event hasn’t historically been a boom for air travel. While the 2020 Tokyo Olympics banned public spectators altogether due to Covid-19 restrictions the two previous editions of the summer games saw airlines hit by slowing sales. Brazilian airlines in 2016 reported underwhelming ticket demand ahead of that year’s Olympic games in Rio. And airlines like British Airways and Iberia experienced traffic dents during the 2012 London Olympics as visitors skipped the city for more peaceful destinations.