U.S. airlines are cutting back on their flight capacities through the end of the year due to an oversupply in the domestic market. This move aims to address falling fares and shrinking profit margins by better aligning supply with demand. According to Deutsche Bank, airlines recently implemented one of the largest week-over-week capacity reductions in the industry, trimming nearly 1% from their planned capacity for the fourth quarter.

Despite this, airlines expect to increase their flying by about 4% year over year during the last three months of 2024. Further cuts may still be on the horizon as carriers continue to adjust their schedules. Airline executives have noted strong travel demand but also a market saturated with flights, leading them to reduce growth plans. This could potentially drive up fares for consumers. Recent U.S. inflation data indicated a decrease in airfare—down 5.1% in June compared to the previous year and 5.7% from May. Reducing capacity could lead to higher fares for travelers, but if demand remains strong, it could also improve airlines’ profitability.

As consumers cut back on spending in other areas, finding a balance between profitable fares for airlines and affordable prices for consumers is crucial for the industry.