Atlanta-based Delta Air Lines plans to further reduce its flights by about two percent next year. While trimming flight schedules is something airlines do seasonally, and the company specifically cited high fuel costs, one expert says it also reflects an industry-wide shift toward efficiency and solid returns for investors.
Robert Mann is a New York aviation expert. He says in the past, airlines focused on flying to new markets even if it wasn’t profitable.
“It is now a financially-driven industry," Mann said in a phone interview. "And this is an industry that’s very interested in earning back its cost of capital in order to prove to investors that it is an investment-grade industry.”
The decision on flights came on the heels of an announcement earlier this month that Delta would lay off 200 people, mostly at its headquarters.
The airline employs more than 25,000 people in Georgia.
Other airlines are also holding off on adding capacity, citing not only the high fuel prices but also a sluggish economy.
United Continental Holdings Inc. plans to keep flying levels flat next year, and American Airlines, like Delta, is cutting flying more than it had planned for the fourth quarter, too.
At an investor conference Tuesday, Delta president Ed Bastian said that demand has remained strong. But he says the airline assumes high fuel prices are here to stay, and it wants to make sure it only flies the routes where demand is strong enough to be profitable.