Delta Air Lines and United Airlines in the past week
alone reduced on a combined basis "about 1 percent of their seats"
for the second half of the year, according to Rodman & Renshaw analyst Dan
McKenzie, who cited "the darkening economic outlook" as the trigger
for the cuts in capacity.
The carriers are pulling capacity ahead of an expected
demand slowdown in the post-Labor Day shoulder season to try to maintain a firm
grip on pricing, McKenzie reasoned, noting, "it's evident the two carriers
are continuing to take steps to support pricing in the back half of the year to
compensate for the weaker economic backdrop."
JP Morgan analyst Jamie Baker in a Tuesday research
note forecasted "softer demand" for the second half of the year,
noting, "it seems logical that the post-Labor Day resumption of corporate
travel may not prove as robust as in prior years."
Despite demand
concerns, UBS analyst Kevin Crissey in a research note on Wednesday affirmed,
"we don’t see a collapse in pricing yet," noting that average fares
for July and August were up year over year by mid-single-digit percentages.
Fourth-quarter available seats provided by the 10
largest U.S.-based passenger airlines are expected to grow 1 percent year over
year, but the new cuts from Delta and United reduced that rate from the
previously anticipated 2.5 percent, McKenzie noted. "Airlines are
continuing to make network adjustments in 4Q, so it's still too early
to draw firm conclusions about what capacity will ultimately look like," he
added.
As for the third quarter, McKenzie noted that year-over-year
capacity offered by those 10 carriers "now shrinks 1 percent or more each
month through September, even after factoring in aggressive growth by Virgin,
Spirit and JetBlue."
Among the newly revealed cuts, Delta effective
Aug. 30 will cancel its five weekly Detroit-Hong Kong flights, according to schedule updates posted on UBM Aviation's
Airline Route website. Those cuts follow other recent Delta reductions
focused on the transatlantic.
Though McKenzie did
not indicate where United intends to trim capacity, the Airline Route website showed a slew of
transatlantic reductions for the winter 2012-13 season, including reduced
weekly frequencies on Chicago–Amsterdam, Newark–Berlin, and separate services
from Washington Dulles to Dublin, Frankfurt and Manchester; the cancellation of
Newark–Copenhagen; and the seasonal winter suspension of Newark–Rome and Washington
Dulles–Moscow.