Shrink is a dangerous thing

Implications: As airlines shrink they lose the most important feature they offer - choice. Invariably the airline with the fewest choices is the least selected. United is the latest to annouce severe cutbacks. Such a shrink bodes ill for the airline as it requires a strong domestic system to handle feed and distribution. Beware the trap PanAm and TWA fell into.

Analysis: What is the day's news if not another airline shrink story? Here's today's big shrink news - The latest layoffs involve nearly 15% of United's 6,518 pilots. The carrier has said it plans to cut its staff by 1,400 to 1,600 as it aims to reduce domestic capacity by 14% in the fourth quarter.

So, as the airline "slims down" how will it ever grow again? With each layoff, and each plane that gets parked, three US airlines are almost certainly going to grow; Southwest, AirTran and jetBlue. Provided their money holds out, perhaps Virgin will also grow.

United is clearly going to hold on to its overseas routes. But with ever more limited feed opportunities, how will these work? Can United sustain with only limited feed and local O&D? For example the Dulles operation depends a lot on feed. As does Chicago. Same for SFO. The picture looks gloomy.