Delta Air Lines is cutting flight capacity as it grapples with higher fuel costs and the effect of the earthquake in Japan, a significant market since Delta's merger with Northwest Airlines.
Delta expects the earthquake, tsunami and nuclear crisis in Japan to reduce revenue at its Tokyo Narita Airport hub by $250 million to $400 million, or as much as 20 percent. Since the 2008 Northwest merger, about 8 percent of Delta's revenue is generated in Tokyo.
The carrier is reducing its flight capacity in Japan by 15 percent to 20 percent through May, including the suspension of its new flights to Tokyo's Haneda Airport. Delta is cutting some capacity at Narita, and will increase charter flights and flight capacity to other places in Asia including China and Seoul, South Korea.
"Then, we're going to monitor how demand comes back," said Delta president Ed Bastian at a J.P. Morgan conference in New York on Tuesday. He said the company expects the impact of the events in Japan to last for six to nine months.
Airlines have increased fares significantly over the last several months, but Delta is also taking other actions to counteract an expected $3 billion increase in its fuel costs this year.
Delta is cutting flight departures from its Memphis hub -- also inherited from Northwest -- by 25 percent starting this fall, from about 200 departures on peak days to about 150 to 170. The cuts involve regional feeders.. Delta is also considering consolidating from three concourses to one in Memphis next year.
Delta also is reducing flight capacity on some trans-Atlantic flights. Overall, it expects to cut its total flight capacity by 2 percent in the second half of this year, compared with the same period of 2010.
For the first quarter, Bastian said the rise in fuel prices amounts to $325 million in increased cost. Winter storms -- including the January snowstorm in Atlanta -- cost about $75 million in expenses and lost revenue.
Southwest Airlines chief executive Gary Kelly also spoke at the conference and said his carrier is weighing how to blend its operations with those of AirTran Airways after their pending merger. Southwest has a point-to-point route system and open, all-coach seating, while AirTran has a major Atlanta hub and more traditional service.
"We will now have first-hand experience with an airline that does something different from us. So we would be foolish not to look at that," Kelly said. But he added that he has no plans to change Southwest's no-bag fee policy, all-economy class service, or open seating.
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