American Airlines became the latest U.S carrier to join an array of other local carriers in cutting capacity projections to offset the pressure posed by the rapidly expanding Gulf based carriers. American Airlines revised its projected 2015 total capacity rise to 2 percent, with domestic capacity expansion slashed to 2 or 3 percent and international capacity pruned by 1 percent.

This contrasts with the projections made by the airline in January, with 3 percent expected growth in full-year domestic capacity and an international capacity hike of 1.5 percent.  The carrier also announced its plan to delay the induction of five Boeing 787 Dreamliners, scheduled for 2016, on the back of oversupply on international routes.

The United Continental too lowered its capacity outlook for 2015 between 1 and 2 percent, departing from the earlier forecast of 1.5 to 2.5 percent. Delta Air Lines said it will cut international capacity by 3 percent for the winter schedule though it means a flat capacity for the fourth quarter.

Gulf Carriers Expanding

For Gulf carriers such as Emirates, Etihad and Qatar Airways it is time for expansion. They are buying more and more wide-body planes and adding up new destinations in the U.S., Europe and Asian markets. In 2013, Emirates announced the plan to add 50 more Airbus A380 super jumbo double-decker planes. Etihad mulled the purchase of 200 aircraft worth over US$52 billion at the Dubai Airshow. In 2014, Qatar Airways confirmed its plan to purchase 50 Boeing 777X jets.

Meanwhile, Wall Street Journal reported that American Airlines Group of having posted record first-quarter profit. However, the largest U.S. airline in terms of traffic is wary of the fluctuations in dollar value and demand patterns.

Dip In Unit Revenue

Like other competitors, American too reported pressure on unit-revenue, which is the index of passenger revenue generated for each seat on a per mile basis. It said the unit revenue will bottom out in the June quarter and fall to 4 to 6 percent, compared to the same period in 2014. Scott Kirby, president of American Airlines, said foreign currency effects contributed two percentage points of dip in the unit-revenue. United Continental Holdings Inc expects a similar decline in unit revenue. Delta Air Lines predicted that its second-quarter unit revenue too will dip by 2 to 4 percent.

Source: http://au.ibtimes.com/many-us-airline-companies-pruning-capacity-expansion-competition-gulf-based-carriers-growing-big