Wednesday, March 30, 2011

Airline Capacity Growth Curtailed by Oil Prices

I'm just catching up to this important report in Business Travel News that airlines are planning to curtail their (modest) capacity-growth plans for the rest of this year.

According to the BTN report, American, United-Continental and Frontier this month "revised downward their 2011 capacity growth plans as crude oil traded above $100 per barrel." That follows Delta, which in February was the first major U.S. airline to cut back on 2011 growth plans.

[Here's the report on American's capacity plans, via Dow Jones.]

Unless air-travel demand falls off significantly, and there is no sign of that, capacity cuts mean that flights will be more full than ever. Meanwhile, service in many markets will be further reduced. That trend is exacerbated by the move to retire fuel-inefficient 50-seat regional jets, which are the mainstays of air travel in many medium-size and smaller (but even some major) markets.


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