The Big 3 US airlines continue capacity expansion in 2016. Domestic pricing pressure remains a worry

Solid 3Q2015 profits by the Big Three US airlines - American, Delta and United - were unsurprisingly overshadowed by continued unit revenue degradation, and also preliminary capacity projections for supply expansion in 2016. The capacity growth is occurring as none of the three major airlines are offering a specific time period of when their passenger unit revenue performance will improve.

Those airlines, however, are indicating that they will lap some of the main drivers of the unit revenue pressure - USD appreciation against most global currencies and lower fuel surcharges in in 1H2016, which should shrink the wide year-on-year decreases posted in 2015.

Pricing pressure in pockets of the US domestic market - Dallas and Chicago - continues to be a challenge, particularly for American Airlines, which has faced growing competition from low cost and ultra low cost competitors. Now American finds itself carefully explaining that strategy of matching fares as it navigates increasing competition from lower cost airlines.