Air Canada, Virgin America also cut back

Airlines are continuing to scale back their domestic flight operations later this year to cope with skyrocketing fuel costs, as the price of oil remains well above $130 a barrel. Merger partners Delta and Northwest have both revised their earlier projections to trim even more flights from their fall schedules compared with last year. Delta CFO Edward Bastian said at a financial conference last week that his airline is now planning to reduce its domestic capacity by 13 percent in the second half of 2008 vs. the same period of 2007; earlier this year, Delta had said it would trim domestic capacity by 9 to 11 percent. During the same period, he added, international capacity will grow by 14 percent. Most cutbacks will be through frequency reductions, he said, although some markets will be dropped – especially non-stop routes that bypass Delta’s main hubs.

Bastian said that some of the Delta markets to be dropped in late summer include a number of routes into Orlando, specifically from Nashville, Key West, Raleigh-Durham, Birmingham, Columbus, Lexington, New Orleans, Panama City (Fla.), Richmond, Louisville and Knoxville. Also on the chopping block are routes between Boston-Jacksonville, Boston-Norfolk, Las Vegas-Los Angeles, Pensacola-Ft. Lauderdale and Pensacola-Tampa, he added. In a speech in Memphis last week, Delta CEO Richard Anderson promised local civic leaders that Memphis will continue to serve as a hub city for a combined Northwest-Delta after the merger.

Meanwhile, Northwest CEO Doug Steenland told the same conference that his airline now plans to reduce its systemwide operations by 8.5 to 9.5 percent this fall, compared with fall of 2007. In April, Northwest had announced capacity reductions of 7 percent. Northwest said it will remove 14 757s and narrow-body Airbus aircraft from its fleet, and its DC-9 fleet will be downsized from 94 at the beginning of this year to 61 by December. “No domestic station closures are planned as a result of these capacity reductions,” Steenland said. “Instead, we will pare unprofitable flying while maintaining the scope and presence of our network.” He added that with oil staying above $130, “the case for the merger, with its resulting synergies, is stronger than ever.”

In related developments, Air Canada said it expects to lay off some 2,000 employees as part of a seven percent systemwide capacity reduction this fall. Although Air Canada will trim its intra-Canada routes by only 2 percent, it expects to reduce capacity on transborder flights to the U.S. by 13 percent, and other international schedules by 7 percent. It hasn’t yet announced specific schedule cuts, except for plans to end its Vancouver-Osaka non-stops October 26 and to convert its Toronto-Rome route to seasonal summer service only. And San Francisco-based Virgin America said it will reduce capacity by 10 percent this fall, mainly by reducing schedules for mid-week, off-peak flights. It does not plan to ground any of its 19 aircraft.