Cheap airplane tickets and cheap vacation packages may be harder to find as a result of Delta Air Lines and its SkyTeam partners, including Air France, KLM, and Alitalia, decision to reduce their trans-Atlantic capacity for this coming fall.
Capacity will shrink between 7 percent to 9 percent in comparison to the same time period in 2010. SkyTeam partner airlines cooperate with antitrust immunity in the trans-Atlantic market, which permits them to legally coordinate schedules and jointly set prices.
The airlines are blaming the capacity reductions on fluctuations in seasonal demand. Experts believe that airlines are preparing for a decline in international travel after a busy summer vacation season because of rising oil prices.
More expensive gasoline prices and increasing cost of goods due in part to higher transportation costs have resulted in many Americans cutting back on spending which will in turn is expected to negatively impact big ticket items such as international travel.
Delta and its SkyTeam partners are trying to get ahead of the expected impact of more expensive jet fuel and predicted decline in demand for trans-Atlantic travel by reducing their number of available seats. Their move is expected to increase airline ticket prices as long as competing airlines do not add seats to offset SkyTeam airlines capacity reductions.
The four major SkyTeam partners operate 260 daily flights between Europe and North America, controlling a sizable percent of the trans-Atlantic market. Their market share helps them establish prices for the airline industry on these routes.
Their actions suggest that trans-Atlantic airline ticket prices will either remain flat or rise after Labor Day.
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