American Airlines Making Big Capacity Cuts
American Airlines has just announced that it'll cut capacity by a little more than 10 percent by the end of 2008. That means there will be fewer seats available, and the move will also let AA sell off about 40 planes. (You guessed it: Some troublesome MD-80s are on the auction block.)
Undoubtedly, the carrier hopes that the cuts will lead to higher fares--and lower fuel bills. But that'll only happen if other airlines play along. Deep-pocketed rivals (Virgin America?) may see this as a chance to knock American out of certain markets, though we doubt AA would be foolish enough to cut service on ultra-competitive routes like LAX-JFK, even if they are money-losers.
Oh, and hidden deep within the press release about the capacity cuts is the announcement of a $15 fee for your first checked bag. Something tells us mimicking Ryanair won't keep you on the top of passenger satisfaction surveys.