Analyst: capacity decline will not save airlines
Don’t expect a decline in capacity to fix the myriad problems of US airlines, says a vice president at Moody’s Investor Service.
Capacity should increase slightly this year as low-cost airlines take delivery of new aircraft, so prices will be set to fill those new planes, says Greg Clifton.
“Low-cost carriers set, or at least substantially impact, pricing decisions on between 80 and 90% of the routes between US cities,” he told the Dallas Business Journal.
As a result, he said, there is no reason to expect fare increases that could save ailing airlines. Any increases, according to Mr Clifton, will be modest.
He predicts the major carriers have enough liquidity to make it through the first nine months of the year. But by summer’s end, Mr Clifton said an economic downturn or other unexpected shock could spur more bankruptcies in the fall.
Report by David Wilkening
David
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