Traffic Jam Over the Atlantic

Delta's aggressive expansion hasn't been universally applauded, however. On a conference call last month, Continental Airlines President Jeff Smisek noted that Delta is growing rapidly in international markets, and added that "they're taking more business risks than I would if I had their execution capabilities, but that's their decision. That said, I think you'll see some more competition in the international markets."

Other carriers have shown more selectivity in their trans-Atlantic routes. American, for instance, said last month that it would cancel plans to add flights between Kennedy and Newcastle, England, citing concerns including fuel costs and excess capacity. "It's probably not the right time to start it," CEO Gerard Arpey told analysts. American recently added service from Chicago to Delhi, India, and next year it will launch service from Chicago to Shanghai.

Meanwhile, UAL (UAUA Quote) subsidiary United Airlines has reduced Atlantic capacity by 6.2% during the past year. The carrier eliminated flights from San Francisco to Paris and Amsterdam to Chicago, and shifted larger airplanes to Asian routes, which showed a 1.5% capacity gain during the year. Now, United uses Boeing 767s and 777s on its European routes, with its larger 747s flying almost exclusively in Asia.

Consultant Dan Kasper of LECG in Cambridge, Mass., said he's optimistic that trans-Atlantic yields won't suffer much from this year's growth.

"Despite the concern that the capacity increase would put downward pressure on prices, that didn't seem to happen last year," he said. "This year, the fundamentals look pretty good for solid economic growth on both sides of the pond, and that would seem to portend well for travel."