A travel boom has produced bumper earnings for major U.S. carriers this year but signs of softening demand on domestic routes have amplified worries that the bubble is about to burst, sparking a sell-off in airline stocks and prompting analysts to slash their earnings estimates.Airline executives say travel remains the topmost priority for consumers. They have been attributing the slowdown in domestic travel demand to a jump in bookings for foreign trips.
Airline fares, however, have been posting a double-digit decline from a year ago. Ticket prices for holiday travel are also down. Analysts have been calling on airlines to cut capacity to protect their pricing power. Carriers increased capacity in the U.S. domestic market by 10 per cent from a year ago in the third quarter and are planning for a 9 per cent increase in the current quarter.
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