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TravelHaven News Brief – Pay more. Get less.

A Reuters article by Kyle Peterson suggests that summer air travelers face a ‘double whammy’ — Lower capacity and fuller flights — and should expect to pay more to fly on cramped planes. This is the message U.S. airlines have for their customers this year — though they prefer to say it differently.

Years of financial hardship, have finally taught the embattled industry that the key to survival is fewer seats and higher fares. Monthly data from U.S. airlines for May show load factors, which measure how full an airplane is, are above 80 percent for most carriers.

Delta Air Lines had a load factor of 83.9 percent, up 1.6 percentage points from a year ago. United Airlines had a load factor of 84 percent, up 3.8 percentage points. American Airlines said its May load factor was 82.8 percent, up 3.6 percentage points from a year earlier.

For years, the airline industry has been hit with one crisis after another. A 2008 spike in fuel prices to record highs was followed by a global economic recession that drained travel demand. Airlines survived these back-to-back assaults by slashing capacity in a bid to cut operational costs and charge more for seats.

As demand returns, flights are fuller than ever, and airlines expect to show profits this year.
“Capacity discipline is clearly key to improving the economics of our business,” according to Kathryn Mikells, UAL’s chief financial officer. Carriers are proud of their capacity cuts and they say they intend to remain disciplined.

“Over the last two years on both the mainline and consolidated basis we’re actually down about 5 percent,” in capacity, Rowe said. “And as we look to this year we continue the trend on the mainline domestic portion of the network where we’ve come to expect our capacity to be down to 0.5 percent to 1.5 percentage points.”

Scott Kirby, president of US Airways Group, said he believes airlines have learned a valuable lesson about over-aggressive expansion. “The industry by and large is led by CEOs who have a different view of the industry than the CEO’s of yesterday,” said Kirby, “Today’s crop of CEOs are former CFOs or general counsel. I don’t think that rapid capacity growth is going to become the problem for the industry, at least for the foreseeable future.”

Meanwhile, airlines are ratcheting up the fees they charge for items and services that once were included in the price of a ticket. Fees for baggage checking and priority seating are generating new airline revenue but leave passengers feeling fleeced. Such aggressive business strategy may not win many fans among the traveling public who are used to last summer’s domestic fares. Since then, fares have risen roughly 15-20 percent.

So the message to air travel customers is: Pay more. Get less. Get used to it.