Responding largely to high fuel costs, the USA's six big network airlines continue to trim their U.S. schedules despite strong travel demand.

The six carriers — American, United, Delta, Continental, Northwest and US Airways— have scheduled 4.4% fewer seats for January than a year earlier, according to a USA TODAY analysis of flight schedules that includes their regional feeder airlines.

To trim capacity, airlines can eliminate routes, fly them less frequently or switch to smaller planes. Whatever the course, travelers face reduced options and fuller flights.

The airlines, which handle about two-thirds of domestic flying, are reacting to this autumn's run-up in fuel prices, which can make some flights unprofitable, says William Swelbar, a research engineer at MIT's International Center for Air Transportation.

"With $90 oil, (airlines) have to really look in the mirror … to see whether the economics still make sense," he says.

Another factor: The airlines in recent years have been shifting more toward international routes, which, in general, are more lucrative.

Fuel and business strategy alone don't explain the reduction.

American, the world's largest airline, will fly less in the USA next month because an unusually high number of its planes are out of service for upgrades, says Tim Smith, an airline spokesman.

"By summer, we expect to be back to full strength," he says.

The year-to-year seat reduction by the big carriers means 72,000 fewer seats a day in the continental USA at a time when the average domestic flight has been running about four-fifths full. About 3% more people flew in the January-August period vs. the same period in 2006.

Schedule reductions will exacerbate problems with prices and selection already seen in Wisconsin, says Judith Berger, a Carlson Wagonlit travel agent in Fond du Lac, Wis. "We only anticipate it getting worse."

Schedule reductions could also complicate winter travel on packed flights, says Wayne Shank, deputy executive director of the Norfolk, Va., airport.

"If you have a cancellation, you could be sitting there for a couple of days instead of a couple of hours," he says.

Kansas City is seeing reductions by Northwest. The airline will fly about 20% fewer seats than last year to both Memphis and Minneapolis-St. Paul by switching to smaller planes, says Justin Meyer, the airport's manager of air service development.

It's a growing problem, he says. Northwest is the only carrier that flies to Minneapolis, and as capacity dwindles and fares rise, more travelers are driving or staying home, he says.

Meyer says United has scheduled five daily flights from Kansas City to Denver vs. seven a year ago.

Nationally, United has scheduled 8.4% fewer seats for January than it did in January 2007. It's the deepest reduction among the six carriers.

Meanwhile, Delta will offer about the same number of seats that it did last January.

Delta Air Lines said Wednesday it is open to a combination with another airline and was looking at deals even before one of its major shareholders wrote to push it to make a bid for United Airlines.

The suggested deal, which is being proposed as an answer to soaring jet fuel costs, would create the world's largest air carrier. A Delta-UAL combination would also likely spark a round of industry consolidation and sharply reduce the choices for passengers, which experts said could lead to higher fares on at least some routes.

The openness of Delta to a deal is a stark contrast to its stance a year ago, when the Atlanta-based carrier fought off a hostile takeover from smaller rival US Airways Group. At the time it argued consolidation would be bad for the airline, its customers and employees.

Pardus Capital Management, which sent the letter to Delta Tuesday, estimates that a deal between Delta and United parent UAL Corp. would save $585 million a year in costs and give the combined carrier the breadth of domestic and overseas routes to attract more lucrative business travelers.

It said its analysis showed that even greater savings were available in a Delta-Northwest Airlines combination, but that combination would not have as strong a route system.

And the letter said the fund was worried that high fuel prices could drive airlines to another round of bankruptcy filings or at least eat up recent profit gains.

But industry consultant Michael Boyd said any combination in the industry would take more than a year to start producing savings. He said any airline combination is an expensive and difficult process, and that most financial gains from such deals only come from reductions in competition and higher fares.

Boyd said that while Delta and United are likely looking at possible deals, he doubts an acquisition will actually occur.

"Every airline CEO has got to be considering scenarios because United is in play. And they'd like to bring capacity down to charge more for what's left," Boyd said. "But will it work in the airline industry? Only on paper."

Pardus' most recent federal filings had listed it as having 3 million shares of Delta, but its letter said it now owns 7 million shares, suggesting it has been buying Delta at the recently depressed share price. It also has 5.6 million shares of UAL. Its holdings represent about 3 percent of Delta's shares and nearly 5 percent of UAL.

Delta issued statements denying a report that it has already held merger talks with United or any other airlines, but adding that its board has formed a special committee, headed by its non-executive chairman, to analyze strategic options. It also has retained financial and legal advisors to assist in this review.

United also issued a statement repeating its often-stated support for consolidation in the industry. The United statement also dismissed the report that talks have already taken place with Delta. Importantly, the Delta pilots union issued a statement saying it would not oppose a combination. Opposition from pilots has been a barrier to proposed airline deals in the past.

Even if Delta made a successful bid for United, it would need approval of antitrust regulators in both the United States and Europe before it could go through. And such a proposal, even if it had the support of regulators, could run into problems in Congress.

Members of Congress threatened the industry with reregulation when US Air was still trying to buy Delta. It didn't take long for some past critics to object to reports of Pardus' letter. Jet fuel prices have soared about 24 percent since Labor Day and are now 55 percent higher since January, when Delta fought off a hostile takeover attempt by US Airways Group, arguing that such a combination would run afoul of antitrust regulators and not be a benefit to the airline, its employees or its passengers.

A spike in jet fuel prices in September 2005 sparked bankruptcies at both Delta and Northwest Airlines. Most of the U.S. airline industry has filed for bankruptcies since the Sept. 11 terrorist attacks.

Since Delta fought off the US Air bid, it has gotten a new CEO, Anderson, a veteran of Northwest and Continental, who has spoken far more positively about the benefits of industry consolidation. UAL executives have long been on the record in favor of mergers in the industry.

He concluded his letter to employees by writing, “This kind of positive experience will keep our customers coming back to NWA because they know they can count on us for their travel plans. Thanks for taking such good care of our customers and for making our airline shine during this peak travel season.”

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