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Increase in Seat Capacity Spells Good News for Passengers, Uncertainty for Carriers

A number of carriers have announced that they are planning to increase their seat capacities in 2018. While this may be great news for passengers, its effect on profit margins isn’t certain. However, the CEOs of both AA and Southwest have downplayed fears of the impact of any potential fare war.

A number of major carriers have announced an increase in seat capacity for 2018, CNN Money reports. It may be great news for passengers, but when it comes to airline profit margins, the impact is as yet uncertain.

United AirlinesSouthwestJetBlue and American Airlines have all announced that they will increase their seat capacities this year. Their goal, the outlet reports, is to expand their overall footprint in the market, even if their expansion lowers fares and has a negative impact on profits. United has announced that it will be looking to increase its capacity by between four and six per cent while Southwest has said that it is planning on increasing seat capacity by approximately five per cent.

JetBlue says that it also expects to up its seat capacity and Alaska Air has predicted that it will see a decline in revenue for every mile flown by passengers.

Some within the industry are concerned that this trend could, in turn, spark a fare war. The outlet reports that the increase in capacity triggered a sell-off in shares earlier this week.

However, the heads of two major carriers have been quick to allay investors’ fears. Speaking to investors on Thursday, Doug Parker, American Airlines’ CEO, was quoted as saying, “When people hear growth, they think ‘Here we go again’. Sometimes, you can get overreactions to a [capacity] number.”

Likewise, Gary Kelly, the CEO of Southwest, has indicated that he believes that fears over excess capacity are exaggerated. He expects fares at his carrier to increase in the coming year “even with this competitive capacity threat.”

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Comments are Closed.
sdsearch January 29, 2018

SEAT CAPACITY SIMPLY MEANS THE NUMBER OF SEATS IN THE WHOLE FLEET. It does not mean anything about number of seats per plane, or about the space per seat. Seat capacity can be increased simply by adding more planes, or by replacing smaller planes with bigger planes.

rylan January 29, 2018

Except that the increase in capacity is still coming at the expense of legroom and comfort... ie more seats in the same planes.

diver858 January 29, 2018

All fun and games until the next major word event / recession, slowing down leisure travel - a matter of when. For the big 3 US carriers, up-gauging, more fuel efficient aircraft, and healthy cash reserves should allow them to better weather the next occurrence, US Govt may consider them "too big to fail" or consolidate, provide financial support. WN used its fuel hedge bonanza during the last downturn to chase out competition intra-California and elsewhere. Kelly is now paying MUCH higher wages, cost differential has significantly narrowed, will likely face stiff competition the next time around.

KRSW January 28, 2018

How does this spell good news for passengers? Less overhead bin space? More banged knees? More violence on aircraft due to overcrowding? More dangerous aircraft due to more passengers on the aircraft and the same amount of emergency exits? Less service provided by flight attendants (If you're flying on some of the US3, less interaction from their selfish FAs could be a good thing)? Airlines most certainly aren't going to decrease prices.

LCSinTexas January 27, 2018

I have to admit I am a bit confused - is this article talking about "increase in seat capacity" as in more seats per plane, or as more space for each seat (width, pitch, etc)?