By Jeffrey Dastin
NEW YORK, Jan 28 (Reuters) - While airlines are in no rushto pass on fuel savings to passengers brought by the collapse inoil prices, the Houston travel market has left them littlechoice.
Airlines serving the U.S. oil capital have resorted to steepdiscounts to lure newly budget-conscious energy executives backinto the air, according to an analysis of ticket prices providedexclusively to Reuters.
Crude's 70-percent drop in the past 19 months has made theHouston travel market a rare point of downward pressure onairline revenues. Its value, including flights, conventions andrelated services, was estimated at $2.8 billion in 2014 in areport for the Texas governor's office.
The ticket data offers more detail than carriers havedisclosed about the challenges they face at Houston's GeorgeBush Intercontinental Airport, the ninth busiest globally bytake-offs and landings, according to Airports CouncilInternational's 2014 ranking.
On average, round-trip business and first class tickets toLondon sold in September 2015 were 14 percent cheaper than ayear earlier, at about $4,600, according to the latest figuresfrom fare clearinghouse Airlines Reporting Corporation.
Tickets to Calgary, a gateway to northwestern Canada's vastoil fields, plummeted 59 percent to $1,020.
And prices for tickets to top drilling gateways Lagos, Dubaiand Scotland's Aberdeen fell 22 percent, 23 percent and 31percent, respectively. (Graphic: http://tmsnrt.rs/1VsEfUg)
"It's a combination of fewer people traveling and not asmany people flying business class," said Gary Pearce, chiefcommercial officer for travel management company ATPI's energyand shipping unit.
"Companies are re-negotiating terms with anybody thatprovides a service to them," he added, such as asking airlinesto sell lower fares or waive clauses on minimum bookings.
Exxon Mobil Corp, ConocoPhillips and BP PLC,which has its U.S. headquarters in Houston, declined tocomment for this story.
BIGGEST LOSER
The oil slide has largely helped U.S. airlines, reducing oneof their biggest expenses and adding hundreds of millions ofdollars to their bottom lines.
However, they have forfeited a large chunk of the gainbecause of fuel hedges they bought as protection against cruderising. Houston's example is another reminder thatcheap oil cuts more than one way.
United Continental Holdings Inc said last week thatit doubled its adjusted fourth-quarter profit to $934 millionfrom a year ago. But slack business in Houston will reduce itspassenger revenue as a portion of flight capacity by 1 percentin the first quarter, the airline said.
Chicago-based United is the most affected because itschedules more than 80 percent of Bush Intercontinental'sflights. About 10 percent of United's flight capacity originatedfrom Houston according to this week's schedules, aviation dataand analytics company OAG said.
Other airlines adjusting to the oil slump include Delta AirLines Inc, which recently stopped flights from itsMinneapolis hub to Dickinson, North Dakota, near the Bakkenshale oil formation.
Alaska Air Group Inc reported on an investor calllast week that its energy-related sales were "fairly stable"because roughly the same number of workers needed to fly tooil-rich Prudhoe Bay to operate drills and pipelines there,despite lower production.
Airlines Reporting Corporation, owned by a group of NorthAmerican airlines, declined to provide data on Prudhoe Bayflights and other routes that were dominated by a single carrierand therefore market sensitive.
LEISURE FARES DOWN
Cheap oil has not only lowered corporate travel spending.Greater Houston's 6.5 million residents are cutting back onleisure trips, too.
The average low leisure fare is down 25 percent from Houstonwhile only down 20 percent overall in the United States,according to a mid-January analysis of the top domestic routesby Harrell Associates, shared with Reuters.
Fares have fallen nationwide, not just in Houston, becauselower fuel costs have let the largest airlines chop their faresin stiff competition with budget rivals like Spirit Airlines Inc
Still, the lowest refundable last-minute fares from Houstonare down 11 percent, but up 5 percent nationwide, HarrellAssociates data showed.
United said last week it is scrapping plans to grow itsHouston operation by 2 percent in 2016 and keeping capacitysteady instead.
The airline declined additional comment for this story butnoted that in January 2015 it shrunk its Houston-Calgaryoperation to three flights per day from four.
The airline's loss could be a gain for budget rivalSouthwest Airlines Co, which in October started itsfirst international flights to Latin America from nearby HoustonHobby Airport.
(Reporting By Jeffrey Dastin in New York; Editing by JosephWhite and Tomasz Janowski)
BP (BP.)