Outlook for 2008: Domestic flights more crowded than ever

If you were hoping that 2008 would bring greater odds of finding an empty seat next to yours, forget it. Several major airlines indicated last week at a New York investor conference that they will scale back domestic growth plans or continue shrinking domestic capacity, at a time when passenger demand keeps rising. And an analysis of flight schedules for January 2008 conducted by USA Today found that the six legacy carriers – American, United, Delta, US Airways, Northwest and Continental – will be flying 4.4 percent fewer seats that month than they did in January 2007.

The legacy carriers are facing higher fuel costs again, but increasing domestic competition from low-cost carriers prevents them from raising fares too much; their response is to cut back domestic capacity and focus instead on more lucrative international routes, where low-cost airlines haven’t made many inroads. As USA Today observed, “To trim capacity, airlines can eliminate routes, fly them less frequently or switch to smaller planes. Whatever the course, travelers face reduced options and fuller flights.”

At the New York conference, a United executive confirmed that the company will downsize domestic capacity by 3-4 percent in 2008, but expand internationally by about 15 percent over the next three years. Delta said it will reduce domestic capacity by as much as 5 percent next year, but that overseas expansion will make international routes account for 40 percent of its total capacity in 2008, up from 25 percent in 2005. Southwest Airlines, which was originally planning domestic capacity growth of 8 percent in 2008, but then cut that estimate back to 6 percent, now says it will only increase capacity by 4 to 5 percent. And Continental is projecting a slight decrease in domestic capacity for 2008, although increased international flying will give it a system-wide capacity gain of 2 to 3 percent.