United Airlines said that it would cut domestic capacity (in other words, cut domestic flights) by up to 3% this year - mostly due to a difficult domestic market, where competition is heavy. Instead, it's shifting some of this capacity over to international routes - for example, this fall, it is starting Washington-Rio de Janeiro and Los Angeles-Hong Kong service. For 2007, United said that international capacity would grow 3 to 4%, while domestic capacity would be cut 2 to 3%, compared to last year's levels. In a statement, Chief Revenue Officer John Tague said, "Given the domestic market's slow revenue growth and excess capacity, we believe that removing marginal domestic capacity is the appropriate response."The Rocky Mountain News also published an interview with Kevin Knight, United's senior vice president of planning. An excerpt:
What is United seeing in the domestic market?Our bookings continue to look pretty good, but we're also seeing capacity increasing versus what we saw last year. That's putting pressure on yields, which is putting pressure on the revenue side. So we're responding to that with a little less capacity. It's pretty much across the board. I wouldn't necessarily say it's low-cost carriers or legacy carriers; it's pretty much industrywide.
