Delta Air Lines is trimming its capacity growth plans for the
fourth quarter, targeting "underperforming" markets in the United States,
Latin America and Asia/Pacific.
It's cutting a percentage point of the capacity growth it
had planned "to address rising fuel prices and improve our unit revenue
trajectory," the carrier said. While U.S. airlines have enjoyed strong
profits over the past several quarters, revenue growth per available seat mile
generally has been weak.
From Delta's corporate clients, it has trailed demand growth.
Revenue from health care-related customers has totaled 2 percent this year,
while media customers have contributed 1 percent so far this year; meanwhile,
both sectors' ticket volumes have grown 5 percent. For financial services
clients, ticket volume has grown 3 percent while revenue has decreased 4
percent.
Within the United States, Delta will cut fourth-quarter capacity
growth to 2.5 percent above the fourth quarter of 2015. Capacity growth will
moderate during the second and third quarters of 2016, as well. It grew 5.4
percent in the first quarter, but Delta plans to increase it 4.5 percent in the
second quarter and only 4 percent in the third quarter.
Delta projects international capacity will flatten or
decrease year over year in the second half of 2016. On transatlantic routes, where
American carriers face steep competition from Middle East carriers and
ultra-low-cost carriers, Delta will keep capacity flat in the winter. It plans
to cut winter capacity on transpacific routes 15 percent year over year and
will reduce capacity on routes to Latin America in the second half of this
year.