CHICAGO, Jan 22 (Reuters) - A reduction in airline seats

in the domestic market that is fueling U.S. airline earnings is

here to stay, United Airlines CEO Scott Kirby said on

Wednesday.

A sharp pullback in flying by U.S. carriers since summer has

driven up ticket prices, helping them mitigate rising costs and

shoring up the industry's outlook.

Those conditions helped United smash Wall Street estimates

in the fourth quarter and forecast stronger profit in the

current quarter. Two weeks ago, rival Delta Air Lines ( DAL )

also offered an upbeat outlook, calling the industry's restraint

in adding seats a "constructive" backdrop.

Kirby said high operating costs at airports in New York,

Chicago, Los Angeles and San Francisco have priced out low-cost

airlines, making them focus on markets where they have a

competitive advantage and putting a lid on unprofitable flying.

"It really is a transformed industry," he told analysts on

an earnings call.

Annual domestic seat growth this year is estimated to be the

slowest in at least a decade. Tight supply and strong travel

demand led to the fastest pace of airfare increases in 21 months

in December.

Carriers' discipline in adding seats has turned analysts and

investors sanguine about the industry.

The NYSE Arca Airline index has gained 36% in the

past six months, outpacing a 9% jump in the S&P 500 index

. United's stock has surged 126% during the same period.

Analysts liken the trend to the run U.S. airlines had from

2012 to 2014, when low growth propelled their operating margins

to over 11% in 2014 from under 6% in 2012, sparking a 300% rally

in airline stocks.

A shortage of aircraft due to production and engine delays

has also put a cap on the industry's growth plans. Kirby said

the availability of wide-body jets has become a greater

challenge and is expected to last at least through the end of

this decade.

"The international environment ... is going to be far

stronger for longer," he said.