OS X Installing, Out of HD, How to back out and return?

I am attempting to install OS X and when I select the location to which to install (on my MacBook Air) which is my Macintosh HD, it says there's not enough space to install there. How can I back out, free space, and return to the installation. When I attempt to quit the installer, it wants me to choose a start up disk but never displays one in the field to choose. If I attempt utilities > disk utilities > macintosh HD there's nothing populated there nor do I know how to edit anything there. I appreciate your help.