Friday, October 14, 2016

The cheap airfare party is about to end

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After years of bargain fares and low fuel prices, U.S. airlines are likely to follow the lead of the second-largest carrier and curb growth next year in a tried-and-true effort to boost ticket prices.

Delta Air Lines Inc. will extend its modest capacity growth of 1 percent in the fourth quarter to all of 2017, with Chief Executive Officer Ed Bastian citing “the weakest revenue environment in recent memory.” Given that the U.S. economy continues to expand, albeit sluggishly, the meager seat growth anticipated next year is reminiscent of the industry’s capacity slowdown after the 2008 financial crisis. For several years, U.S. carriers checked their growth as they maneuvered through the shoals of recession, high oil prices, and a wave of mergers. Read more...

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