Wall Street Stands In Way of Airline Capacity Increase

When Southwest Airlines announced last week plans for increasing seat capacity starting November, Wall Street analysts and investors were very quick in taking the entire airline sector to the shed.  All airline stocks lost 2-3% when the announcement was made, as analysts were "concerned" about empty seats.
This misguided notion disregards the reality that airlines have been cutting capacity across the board for the past four years and a mere increase of 7% by one airline does not spell the doom of an entire industry.

There are many under-served airports and regions in the country that have seen high growth rates since the 2008 recession.  Airports like Austin and Dallas, along with many west coast cities have experienced double-digit growth on an annual basis.  Yet, airline service has decreased over the past few years.  The capacity increase announced by Southwest should be viewed as a healthy sign of demand not dilution by Wall Street, the investors and the "expert analysts".

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