Delta Air
Lines plans a 2 percent year-over-year capacity reduction for the second half
of 2011, a reversal from its previous 2 percent growth plan, and US Airways lowered
its planned full-year capacity growth to 1.5 percent from 2 percent, the
carriers revealed during a Tuesday JP Morgan aviation conference. American Airlines and United-Continental Airlines this month similarly adjusted growth plans in response to rising fuel costs.
Delta after the peak summer
travel season plans to cut capacity in markets "where revenue has not kept
pace with fuel, the biggest entity of those being the transatlantic," president
Ed Bastian said during the conference. The carrier will reduce capacity on transatlantic routes
in the second half of the year by 4 percentage points. "We've been working
right alongside our partners at Alitalia, Air France and KLM to coordinate not
just a Delta response but an overall joint venture response," Bastian
said.
Delta's domestic U.S. capacity
for the last six months of 2011 will be down 3 percent, while the carrier still
expects to grow Latin American and Pacific capacity in that period.
US Airways plans to reduce fourth-quarter capacity by up to 2
percent, though labor agreements limit
the level of full-year capacity the carrier can remove. "We've already
reduced our aircraft down essentially to the minimum that we can," said US
Airways president Scott Kirby during the JP Morgan conference. "Our
flexibility is in reducing the utilization. We could probably reduce another 4
to 5 percent without violating any of our labor issues, but not much beyond
that."
Meanwhile, Southwest Airlines and JetBlue Airways are
maintaining full-year growth plans of between 5 percent to 6 percent and 7
percent to 9 percent, respectively.
Southwest CEO Gary Kelly during the conference claimed that success in raising fares thus far has offset
the need to modify growth plans. "We're
working the fares lever with delightful success," Kelly said. "I'm
very pleased with the results thus far, given that our fuel costs are so much
higher than planned. We're not looking at this stage to that capacity
lever."
Executives from other
airlines similarly praised the industry's ability to at least partially offset
the rise in fuel costs by growing fares and revenue. "However, it's not
going to be pricing alone that will cover the dramatic rise we've seen in fuel
prices," Bastian cautioned.
Noting six broadly adopted
domestic U.S. fare increases this year, airfare tracker FareCompare on Monday
reported United
and Continental initiated a $10
roundtrip fare increase "across the bulk of their respective U.S. route systems."
Delta also "put another pricing
action into the market yesterday afternoon," according to Bastian, though it wasn't immediately
clear if that was in response to the United-Continental effort.