American Airlines Group (NASDAQ:AAL) said Friday it intends to lift capacity restrictions and offer all seats for sale beginning July 1 as the industry continues to balance a need to boost revenue with efforts to assure passengers it is safe to fly.

American currently is limiting seating capacity to 85% on flights, including blocking off middle seats in the main cabin. But American in a statement said that it would book to capacity beginning July 1, while offering passengers some flexibility to choose other options if they would prefer to not be on a full flight.

An American Airlines plane in flight.

Image source: American Airlines.

American said it will notify customers and allow them to move to more open flights without fees and allow passengers to move to other seats when space is available.

The airline industry has been hit hard by the COVID-19 pandemic, which has caused travel demand to plummet. The industry has tried to take steps to coax travelers back onto flights, including restricting capacity, but with all the airlines currently bleeding cash there is also an urgent need to boost revenue.

American said it is teaming with Vanderbilt University Medical Center for advice on how to best keep its passengers and crew healthy during the pandemic, and taking other steps including asking customers during the check-in process to certify they have been free of COVID-19 symptoms for the past 14 days.

But with other airlines pledging to limit ticket sales through the summer -- Southwest Airlines, for example, will limit capacity to two-thirds of the seats through September, so no one will have to sit in a middle seat -- American's policy change could put it at a competitive disadvantage.

The policy change likely also means that American intends to hold off on adding new flights. American shares rocketed higher earlier this month after the airline said it would boost its flight schedule in response to growing demand, but a recent uptick in COVID-19 cases nationwide has the industry rethinking growth plans.

Delta Air Lines said Thursday it is unlikely to add much to its schedule for the rest of the year due to the spike in new cases.