Northwest Airlines to cut capacity once again, raise fares, cut workforce

Northwest Airlines, a major airline based in the United States, will once again cut its capacity in the fourth quarter of 2008 and reduce its workforce in its efforts to cope with rising prices of aviation fuel. Northwest plans to reduce domestic and international capacity by 8.5% to 9.5%. It had said earlier that the fourth-quarter domestic capacity would be cut by 12.6%.

It had reduced capacity in April 2008.

The airline has also decided to increase fares, fees as well as fuel surcharges though it did not give out details.

Northwest Airlines, to be bought by Delta Air Lines soon, is the latest major airline in the United States to have announced cutbacks in the face of record-high oil prices.

Northwest Airlines Incorporated, the principal subsidiary of Northwest Airlines Corporation, is headquartered in Eagan, Minnesota, the United States. It has three major hubs in the United States – Detroit Metropolitan Wayne County Airport, Minneapolis-Saint Paul International Airport, and Memphis International Airport. Northwest also operates flights from a small hub in Asia at Narita International Airport near Tokyo and also operates transatlantic flights in cooperation with partner KLM from Schiphol Airport in Amsterdam, besides maintaining focus city operations at Indianapolis International Airport, Honolulu International Airport, and Seattle-Tacoma International Airport.

Recently, Northwest Airlines had added a charge of $25 on second and third checked bags.

In a the statement, Doug Steenland, chief executive officer of Northwest Airlines, said that the carrier is “taking prudent action to reduce our capacity and right-size the airline.”

Of late, Northwest Airlines had been expanding its international routes. In the first quarter of 2008, it had expanded its international capacity over the Atlantic by over 16%.

The planned reduction in capacity will mean doing away with Northwest Airlines’ fleet by 47 aircraft – including 14 Boeing 757 planes, Airbus A319s and A320s, as well as decreasing the number of 94 DC-9 aircraft at the beginning of 2008 to 61 by the end of 2008.

However, details on the hubs and employees to be affected were not divulged.

According to some analysts, airlines based in the United States will have to discard about 20% of their collective capacity if they want to stabilise the industry and also  raise fares further in the wake of fuel costs having almost doubled in the past year.