Yesterday’s blog post about the nascent recovery in the aviation industry is followed today by reflections on the actions of carriers to boost capacity on some of their main routes.

As this article argues, the strong rebound in demand for travel and freight transport provides airlines with a powerful urge to boost their capacity. This means increasing the number of flights they make available to the market. If they do not increase their supply of seats or freight space, they could lose business to competitors. This fear of loss of market share is driving current operational strategy.

And yet the recovery in aviation is in its infancy. While the data from IATA indicate a strong rebound over the whole of 2010, this followed the sharpest decline in demand on record in 2009. If airlines add seats faster than demand increases that will hit carriers’ profits, as they will have to lower prices to sell the extra capacity or see their load factors decline.

This has sparked some squabbling among the major airline groups, with some accusing the others of endangering the industry’s return to profitability. Air France-KLM is boosting capacity by almost 6%, International Consolidated Airlines Group (IAG), formed from the merger of BA and Iberia, increased seat numbers by more than 9% and Lufthansa plans to add 11% extra capacity this summer. However, as oil prices have begun to rise sharply in recent weeks, some carriers particularly in the US have started to cut capacity.

As a barometer of the health of the world economy, aviation continues to show signs of recovery. But forecasting what lies ahead may be risky in the current climate.