Delta Cuts International Flying on Weaker Demand

It took awhile, but international demand has really started to fall off. Delta, an airline which raced to move as much of its fleet into international flying as it could, is now realizing that it has too much. It's time to cut.

Delta released a letter sent to its troops regarding the capacity cuts, which will begin in September after the summer season. Capacity will be removed from Asia (12 to 14 percent) and Europe (11 to 13 percent) for a net network drop in about 10 percent. It won't be just one move. The airline "will exit low performing markets, down-gauge certain routes, adjust frequencies, and move some markets to seasonal service."

None of this should come as a surprise. In February, Delta and Northwest combined saw European traffic drop 10.1 percent on a 1.2 percent increase in capacity. That, of course, resulted in a dramatic 7.6 point drop in load factor. In Asia, the news was better as traffic dropped 8.5 percent on a 4.7 percent decrease. That led to a load factor decline of only 3.3 points.

Once again, US airlines are showing remarkable capacity constraint, and that bodes well for the industry. Delta was one of the more aggressive capacity builders, especially in Europe, so it's good to see them admit that they need to cut back over there.

The weakening of demand is clear, but Delta does seem to think that it will hold up well enough for them to keep a full summer schedule. I'm not so sure, considering some of the early fare sales I've seen out there. This could be a rough summer.