Based on ATA data for June, you can see why flying in the US is becoming less comfortable. This is what happens as the economy decline starts to bottom out and the airlines hold back capacity. These load factors are levels not seen in a long time and the reason for higher fares and very much higher profits.

Imagine when Continental and United become one airline, it will be tougher to find bargain fares because one competitor goes away.   Makes sense for the industry, maybe, but not the consumer. However there is good news – possibly. jetBlue will keep adding capacity.  Virgin America just put in a big order too. That is all one needs to know, because the economic rule of an oligopoly is that if one vendor adds anything, the others have to respond. It happens every time – check OPEC as an example.  As soon as one cheats, then they all have to cheat.  And the US airlines are still run by people who adore market share.

They don't talk like that anymore, but they can't help themselves. We bet the desire to add capacity will be irresistible.  There is no way the legacies, now more trim than ever before, are going to allow the new (not quite LCC) hybrids to eat more of their lunch. Fight's on and the weapons are seats. Imagine the fear of jetBlue and 787s? Imagine Virgin America flying to the near international destinations? How long before Southwest jumps into this?  As these hybrid airlines move into traditional legacy markets, there is no way we don't have some sort of war of attrition. The hybrids have lower costs but the legacies have heft.  If a hybrid drops 150 seats (737/A320) into a market, a legacy will respond with 200 (757) and take it from there.

When airlines fight, customers win. If there are fewer airlines to fight, the number of fights will grow. With some cash in the bank, old battle plans are being quietly dusted off. It was always so. Happy days are just that, happy. Airline managers love these battles. As the economy starts to stabilize we look forward to lots of new/old market share fights.

Supporting the fight is this news: BTS reports average domestic air fares rose 4.1% yoy to $328 for the three months ended March 31, the second highest March quarter since 2001. Confirming the joy this brings, “This is a positive sign for recovery, not just in the airline sector but across the broader economy as well, today’s news about increasing fare levels should  be kept in perspective; not only are the airlines nowhere near recovering from devastating losses, airfares have not come close to keeping pace with inflation,” James May, President and CEO Air Transport Association of America.

Can you hear it? "ding, seconds out!  Round number 8"

In other news:

• Sir Stelios warns easyJet
• UK government and Heathrow
• Boeing reports
• Boeing and the 737RE – no easy options

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