US airlines: capacity to rationalise as headwinds strengthen

Domestic and International ASK growth in the US is forecast to rise for 1H2019. This may spur some concern in the investment community as uncertainty on long term trade policy, stock market swings and the potential for a prolonged government shutdown coalesce to create pressure on the US' economic performance.

The country's largest airlines have varying forecasts for capacity growth in 2019, with Southwest and United planning increases solidly above projected GDP growth, whereas American has declared its capacity expansion this year would be close to the lowest in the US industry.

Signs are indicating some slight softening of demand in the US domestic market, which could result in revisions in current capacity forecasts; however, for now most of those operators feel satisfied with their 2019 capacity projections.

It is difficult to predict the ultimate trajectory of capacity in the US during 2019, but even as OPEC has opted to cut production and oil prices are rising, a certain level of volatility in pricing remains, which should result in the country's airlines taking a rational approach to capacity management.