Categorized | Airlines

Delta, SkyTeam partners announce deep capacity cuts…

Posted on 20 May 2011


KLM and Air France jets sit at Amsterdam’s Schipol Airport.


The busy summer travel season is not even upon us yet and Delta Air Lines and its major SkyTeam partners – Air France, KLM and Alitalia – announced trans-Atlantic capacity cuts today for this fall.

Capacity will decline by 7% to 9% over the same time period in 2010, according to these airlines, which operate with antitrust immunity in the trans-Atlantic market, allowing them to legally coordinate schedules and collude on prices.


The airlines say that the capacity cuts are due to “fluctuations in seasonal demand,” but it is also likely that the airline industry is bracing for a decline in international travel after the usually busy summer vacation season due to the inflated price of oil, which has been hovering in the $100 per barrel range for some time.


With higher gasoline prices and the cost of goods rising due to higher transportation costs, many Americans are getting skittish about spending money and that is more likely to impact big ticket items, like international travel.


With higher costs of jet fuel and anticipated declining demand for travel, Delta and its SkyTeam partners are trying to minimize the number of empty seats in the trans-Atlantic market this fall, which would likely boost prices as long as other airlines don’t rush in to fill the void left by the SkyTeam carriers’ capacity cuts. With 260 daily flights between Europe and North America, the four major SkyTeam partners control a sizable portion of the trans-Atlantic market and are in a good position to set prices for the airline industry on these routes.


For air travelers, this may be an early indicator that air fares will remain at their current levels or go higher still after Labor Day following the summer vacation travel season

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