Tuesday, December 02, 2008

Delta Slashing Capacity

Delta Air Lines today announced a further cut of 8 to 10 percent in domestic capacity for next year and a 3 to 5 percent cut in international capacity.

Confronted with demand that keeps falling faster than they're been able to cut seating capacity and flights, airlines are about to line up to announce even more capacity cuts next year.

The result, as I have said for months, will be the start of a fundamental restructuring of the air-travel system in this country -- and it won't be good news for travelers.

Delta, which recently acquired Northwest Airlines in a merger, noted that despite the fact that oil prices have fallen $100 a barrel since July, the airline industry "now grapples with a U.S. economic recession that has eroded travel demand."

All airlines reduced capacity this year. United Airlines, for example, cut fourth-quarter mainline capacity by 16.6 percent.

Wisdom in the conventional media said that the already announced capacity cuts would likely suffice, as airlines benefited from a sharp drop in fuel costs. Some of us said otherwise, as air traffic obviously began to plunge and as airlines took a unique opportunity to downsize for the future.

Meanwhile, a day after Continental Airlines said that its traffic was off sharply in November, Southwest Airlines announced today that its November traffic was off 10.7 percent compared with November 2007. The average load factor was 63.2 percent, down 6.1 points. Load factor is the average number of available seats sold. Available seats were down a slight 0.4 percent in November, Southwest said.


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