Delta Airlines to reduce capacity further 2009
03 Dec 2008
New York: The world's largest air carrier Delta Air Lines has said that it would reduce its overall flight capacity by anywhere between six to eight per cent in 2009, on account of the global economic crisis that has weakened demand or air travel.
Delta said that as a result of its plans to reduce capacity, flights would be crowded, and fare deals scarce.
The Atlanta-based carrier merged with Northwest Airlines in October this year (See: Delta – Northwest Airlines merger approved)
It has also announced that it will kill its least fuel-efficient flights and trim domestic capacity by upto 10 per cent, while paring international seats by around five per cent.
Reports said industry observers are viewing Delta's announcement as a clarion call for more capacity rationalisations across the aviation industry.
Earlier in the year, other leading US carries such as American Airlines, United Airlines, and Continental Airlines had announced capacity reductions. From then, a number of them are looking at extending the cuts further into 2009, with Delta leading the charge with its announcements.
Reports cited analysts as predicting industry-wide capacity rationalisations of around five per cent in 2009, compared to the average 10 per cent rationalisation seen in 2008. Reports suggested that American Airlines would be next to announce capacity cuts resuting from the recession in the US economy.
American Airlines chief Gerard Arpey has already spelt out some of his plans for the company for 2009, at its recent recent earnings teleconference, where he said that domestic capacity can be expected to decline by around 8.5 per cent in 2009 as compared to the previous year, and international capacity would follow suit to the tune of around one per cent in 2009.
The 2008 capacity reductions were prompted by the fuel price spike, where oil reached an all time high of $147 per barrel. In addition to the cuts, airlines instituted charges and fee to revive revenues, including new fees for extra luggage, pet handling, over-the-phone ticket purchases, frequent flier mile redemptions, and other services that were traditionally part of the ticket price. Even though fuel costs have dropped since then, the fees still remain in place.
Layoffs too have become the norm in the airline industry, with Delta announcing the elimination of around 4,000 jobs from its 75,000 strong workforce through voluntary severance packages. Domestic capacity reductions by the airline would also see its payroll fall as a result, Delta said in its regulatory filing.
In July 2008, American Airlines had announced job cuts to the tune of 7,000 positions, totalling around eight per cent of its staff strength, which would be implemented through the end of 2008.
