In what could bode well for the future of cheap airplane tickets and cheap vacation packages, with the economy recovering airlines have announced that they anticipate restoring capacity, entering new markets and increasing existing frequencies in the back half of the year so long as fuel prices remain relatively stable.
Airline capacity was reduced significantly starting in the fall of 08 and continuing through all of 09 and even into the beginning of this year. Both low cost and traditional airlines have been reducing their number of flights. This reduction began as a response to increasing fuel prices and then grew as the recession resulted in falling demand for air travel.
Airlines now report that bookings are returning to levels of two years ago and the time is right to add more seats in the air. Corporate travel sales were up 63 percent, according to Delta, at the end of May.
Airlines warn that increasing ticket sales and improved financial number will not result in capacity being adding across the board. They plan on being very selective where new routes will be added. Alaska Air noted that You have to be careful about adding new capacity. You cant grow yourself into profitability.
The larger traditional airlines will focus on large markets such as New York and on international routes. The strongest growth segment this year has been international service, particularly Asia traffic.
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