This past week, airline reports from Continental Airlines, United Air Lines and a few others have been released. Both airlines have begun to cut capacity on routes. With the capacity cuts, airlines hope that they will be able to raise ticket prices and maintain higher load factors. Yet, from what these traffic reports are showing, consumers aren’t buying it. United reported that their load factors decreased over 2% in North America. In other regions, it decreased as high as 4.5% (in Pacific routes). Continental Airlines increases their capacity 2.5% compared to June of 2007. The 2.5% is a years worth, however in the following months, they will begin to cut capacity. Continental’s load factor decreased system wide as well.
Currently, consumers are in a slump when it comes to buying and traveling. In the long run though, I firmly believe that load factors will increase and capacity decreases, assuming airlines don’t raise ticket prices too high.
