Delta Air Lines is not immune from soft domestic pricing. Will domestic capacity shrink? Can it?

Delta Air Lines' 2Q2015 overall favourable financial performance was overshadowed by its decline in passenger unit revenues, which now do not seem destined to return to a positive performance in 2015. The airline anticipates that its unit revenues will remain flat by YE2015 after falling during 3Q2015, which is during the high season for US travel.

Delta has identified three markets where it is experiencing the largest decline in yields - Dallas, Chicago and Orlando. American and Southwest appear to be engaging in competitive pricing action in Dallas and Chicago, and ULCCs have also added service in some of those markets during the past year, creating challenges in achieving yield traction.

The airline's projected fall in 3Q2015 passenger unit revenues, and estimates of a flat performance at YE2015 are a bellwether for US domestic pricing trends for the remainder of 2015. With a couple of exceptions, it seems as if most of the country's airlines will record an unfavourable unit revenue performances for 2015, which is not sustainable over the long term.