Airlines posting largest profits in a decade
The bad news for passengers is that they are paying more for their tickets but the good news for the industry is that the year could shape up to be the most profitable in a decade.
Operating profits for airlines in the United States exceeded US$7.1 billion in the first nine months of 2010, according to the most recent data from the US Department of Transportation.
That tally surpasses the industry’s full-year profits going back to at least 1999, when airlines posted income of $6.8 billion over 12 months.
That’s due in part to the fact that air fares are much more expensive this year.
Fares jumped 13 percent since 2009, according to an average of domestic ticket prices compiled by the US Bureau of Transportation Statistics. And that doesn’t include new fees within the past couple of years.
“The industry’s big haul is in stark contrast to 2008, when it lost more than $5.5 billion in the face of a double whammy: A recession that sent demand into a tailspin and fuel prices that spiked sky-high,” says CNNMONEY.com.
Carriers responded by cutting the number of flights they offered, slashing those with the fewest passengers. They packed the airplanes full so they wouldn’t lose money on empty seats. And they added fees for services that once came for free, like checked baggage and in-flight food, to boost income.
"They were preparing for the worst," Robert Pickels, airline industry expert and senior equity analyst for Manning & Napier, told CNN. "If you’re staring into the abyss like that, it really changes your behavior."
This survival strategy turned into a money-making boon when demand unexpectedly picked up this year, despite persistent high unemployment that had previously kept passengers at home.
"The baggage fees are a way to raise fares without publicizing the raised fares," Pickels said.
By David Wilkening
David
Vegas’s Billion-Dollar Secrets – What They Don’t Want Tourists to Know
Visit Florida’s New CEO Bryan Griffin Shares His Vision for State Tourism with Graham
Chicago’s Tourism Renaissance: Graham Interviews Kristin Reynolds of Choose Chicago
Graham Talks with Cassandra McCauley of MMGY NextFactor About the Latest Industry Research
Destination International’s Andreas Weissenborn: Research, Advocacy, and Destination Impact
Graham and Don Welsh Discuss the Success of Destinations International’s Annual Conference
Graham and CEO Andre Kiwitz on Ventura Travel’s UK Move and Recruitment for the Role
Brett Laiken and Graham Discuss Florida’s Tourism Momentum and Global Appeal
Graham and Elliot Ferguson on Positioning DC as a Cultural and Inclusive Global Destination
Graham Talks to Fraser Last About His England-to-Ireland Trek for Mental Health Awareness
Kathy Nelson Tells Graham About the Honour of Hosting the World Cup and Kansas City’s Future
Graham McKenzie on Sir Richie Richardson’s Dual Passion for Golf and His Homeland, Antigua
ADS PRO 
Phocuswright reveals the world's largest travel markets in volume in 2025
Higher departure tax and visa cost, e-arrival card: Japan unleashes the fiscal weapon against tourists
Singapore to forbid entry to undesirable travelers with new no-boarding directive
Cyclone in Sri Lanka had limited effect on tourism in contrary to media reports
Euromonitor International unveils world’s top 100 city destinations for 2025