The Air Transport Association said airlines in the U.S. increased domestic capacity by almost one percent in the second quarter of 2010, and 3.4 percent in the current quarter, The Wall Street Journal reported.
The good news is tempered by fear airlines will add too many seats, which contributed to bankruptcies and layoffs earlier this decade.
"As long as each airline continues to exercise restraint, everybody benefits financially, said Douglas Runte, a managing director at Piper Jaffray & Co., a financial management company.
International capacity by airlines flying in and out of the U.S. is expected to rise more than 9 percent in the fourth quarter and 10 percent in the first quarter of next year, keeping investors edgy the industry will add too much capacity, the newspaper said.
"A rogue airline adding a lot of capacity individually benefits, while diminishing results in aggregate," an unnamed hedge fund manager said in the report. "It also potentially spurs a competitive response by other airlines."
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