Delta Air Lines will cut its plans to add new flights in the second half of 2016, and it's pushing back plane purchases too. It could mean higher prices for you.
The airline said it is trimming its planned capacity growth to below 2% in the second half of this year. Delta also said it would defer delivery of four widebody jets from 2018 to 2019 or 2020.
Slowing its growth "allows Delta to address current fuel and revenue headwinds, while positioning the company to achieve its long-term goals." The information was made in an investor presentation Monday.
One of Delta's goals is to stop airfares from falling. In fact, the airline's presentation says that it is hopeful of being the first major airline to see an increase in fares this year. Trimming capacity growth will help the airline achieve those higher airfares, Delta Chief Financial Officer Paul Jacobson said at another investor presentation on Tuesday.
Delta's fares were down about 5% in the first quarter compared to a year earlier, according to its earnings report.
Fuel costs are still well below year-ago levels, but they're up more than 60% from the low points earlier this year as oil prices have rebounded.. The cheap fuel had caused all the major U.S. airlines to expand capacity to try to take advantage of lower costs - fuel is the second largest expense for airlines after the cost of labor.
But the growth in capacity has pushed down fares at the major carriers since more choices leads to lower prices for passengers.
Related: Lowest airfares in 7 years this summer
Delta (DAL) had hinted that it could cut its growth plans on a conference call with analysts in April. The airline's filing did not give details about what markets could see some reduced expansion plans. The trims will be a "a balanced approach across the system," Jacobson said Tuesday.
