U.S. carriers this year expect to add only minimal supply to
the domestic market, positioning them to maintain a degree of pricing power.
As measured by available seat miles, domestic capacity this
year will grow about 2 percent year over year, according to a Morgan Stanley
forecast. Updated last week and based on carrier data, OAG schedule information and
analyst estimates, the forecasts calls for no change in international capacity.
That 2 percent domestic growth estimate is in line with 2013
U.S. gross domestic product projections, according to Dahlman Rose & Co.
analyst Helane Becker, "and as a result should be met with higher demand."
Analysts keep close watch on the correlation between GDP and
airline capacity to determine if supply, demand and pricing remain in balance.
So far, they're not seeing anything that would suggest falling airfares.
Buckingham Research Group's Dan McKenzie this month wrote
that "the overall capacity backdrop remains conducive to improved pricing
power in 2013."
Though carriers and analysts expect modest full-year
capacity growth, several major airlines this week said they expect
Southwest Airlines CEO Gary Kelly last week told analysts
and media that he sees a "pretty benign industry capacity forecast"
and expects first quarter domestic capacity to drop "in the 1 percent to 2
Southwest is expecting its own first-quarter capacity to be
flat year over year, with full-year capacity up 2 percent from 2012.
United Airlines indicated that its systemwide first-quarter
capacity could be down by as much as 5 percent year over year. "We have
operated in an environment of slow global economic growth for the last few
years and based on the latest GDP information the 2013 outlook is
similar," said United vice chairman and chief revenue officer Jim Compton.
Delta, meanwhile, expects systemwide capacity this quarter
to be down between 2 percent and 4 percent against the year-earlier period.
There are some bastions of growth. Alaska Airlines expects
capacity this quarter to grow 8.5 percent year over year and 7.5 percent of the
full year. JetBlue and Spirit also are poised for year-over-year growth,
according to analysts.
US Airways, meanwhile, expects full-year capacity to be up
about 3 percent year over year, which president Scott Kirby said "has been
driven primarily by larger gauge aircraft."