Why the U.S. stopped collecting fees for international arrivals

One day after the U.S. government expanded rules for foreigners using visas, many countries said they would waive or delay the fees for arriving passengers.

In a statement, the U.S. embassy in Israel called the cancellation of the visa processing fee “an exceptional measure for the critical dialogue currently occurring between the United States and Israel.”

Also affected were flights between the United States and numerous Middle Eastern and African countries, including Egypt, Nigeria, Morocco, Jordan, Israel, Saudi Arabia, Turkey, the United Arab Emirates, and more.

The effects of Friday’s directive are immediately felt at airports in the U.S. On Wednesday, as President Donald Trump signed an executive order to close the U.S.’s borders to citizens of Syria, Sudan, Yemen, Iraq, Iran, Libya, Somalia and Yemen, a number of Middle Eastern and African nations soon announced that they would no longer charge visa fees for U.S. citizens passing through their airports.

The Organization of Islamic Cooperation said it would cease the fee charge for U.S. passengers that same day and that airlines from the six countries had already passed the cost on to U.S. passengers.

That state of affairs has had an immediate impact on flights. U.S. carriers American Airlines and United Airlines, whose flight schedules rely heavily on European destinations for traffic, reported surge in bookings from overseas. A spokesman for American Airlines said the airline, which carries a greater share of domestic traffic than any other carrier, saw a 7 percent increase in nonstop bookings from within the U.S. and a 14 percent increase in U.S.-Europe bookings in the 24 hours following the directive’s implementation.

The interest in nonstop flights to European destinations has been particularly strong. A flight operated by Condor, the German low-cost airline, on March 29 from Leipzig to New York City had a 93 percent passenger load factor.

U.S. carriers who have international flights face an additional challenge because of the fee waiver: Even though European carriers like Lufthansa have struck agreements with American Airlines and United to provide more direct flights, many passengers still prefer the more convenient, and sometimes cheaper, routes between U.S. cities and European cities.

Through March 31, U.S. carriers carried 567,112 passengers from within the U.S. to New York, 76,837 to Los Angeles, and 10,104 to Chicago, according to U.S. Department of Transportation data.

In 2016, U.S. carriers carried 12.8 million passengers from within the U.S. to Europe, compared with 2.5 million from the Middle East.

That kind of intra-U.S. passenger traffic is an important part of airlines’ revenue generators. For instance, JetBlue Airways reported in 2016 revenue from passenger revenue from flights within the U.S. and abroad. For December 2016, the airline reported revenue of $1.90 billion from service to within the U.S. and abroad, up from $1.42 billion in 2015. (The airline’s revenue from all parts of the business, including flights to other countries, rose to $6.79 billion from $6.25 billion in 2015.)

The international plans of U.S. airlines also offer insight into the successful strategies of American and United, whose routes to Europe tend to be longer and more lucrative. The recent surge in Middle Eastern bookings to U.S. airports suggests that it would be in the U.S. carriers’ interest to have more passengers connecting on their flights.

The article “International Arrivals Surge Under New U.S. Travel Rules” appeared first on the Bloomberg Technology Travel.com

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