Car­ri­ers’ prof­its are up, but fliers shouldn’t ex­pect fees to fall

Austin American-Statesman - - BUSINESS & PERSONAL FINANCE -

With the sum­mer travel sea­son off to a roar­ing start, fares up and money rolling in from fees on things like checked bag­gage, good times are fi­nally back for the nation’s air­lines. For trav­el­ers, that means it’s get­ting harder to find bar­gains.

The six biggest U.S. air­lines earned about $1.3 bil­lion in the sec­ond quar­ter, and more prof­its are ex­pected for the rest of the year. Even so, those half-dozen car­ri­ers are still woozy from los­ing $22.7 bil­lion in 2008 and 2009.

There were plenty of fare sales when the air­lines were strug­gling to fill seats. Now those seats are in de­mand, so deals are less com­mon. And trav­el­ers have be­come ac­cus­tomed to pay­ing for “ex­tras” such as an aisle seat, check­ing bags and buy­ing a ticket over the phone — perks that used to be in­cluded in the fare.

Here’s a look at what trav­el­ers can ex­pect in the months ahead:

Fares and fees: Af­ter two years, the air­line in­dus­try has be­come hooked on fees, first used to over­come high fuel prices and then slump­ing travel de­mand. A new study shows that world­wide, car­ri­ers took in $13.5 bil­lion from fees in 2009, a 43 per­cent jump in just one year.

“Fees are go­ing to stick, and they’re go­ing to be­come more per­va­sive,” says Jay Sorensen, a for­mer air­line ex­ec­u­tive who is now pres­i­dent of con­sult­ing firm IdeaWorks, which did the study on fees.

United and Amer­i­can led the way on “an­cil­lary rev­enue,” in­clud­ing fees, at about $1.8 bil­lion apiece last year, ac­cord­ing to IdeaWorks. United Air­lines Pres­i­dent John Tague calls fees “an un­equiv­o­cal suc­cess,” and sug­gests his air­line could still dou­ble the amount it’s bring­ing in with bag­gage fees.

In­dus­try watch­ers are wait­ing to see whether trav­el­ers will pay Spirit Air­lines’ fee of $45 for some carry-on bags on flights start­ing Aug. 1.

Air­lines have been able to boost ticket prices too. Sum­mer fares are up an av­er­age of 18 per­cent, ac­cord­ing to fig­ures from a trade group.

Packed planes: Planes are stuffed like never be­fore. In­clud­ing re­gional flights, Delta, Con­ti­nen­tal and Amer­i­can all sold at least 86 per­cent of their avail­able seats in June.

How­ever, travel de­mand will ta­per off as fall ap­proaches — Con­ti­nen­tal Air­lines is al­ready see­ing that. Still, air­lines will try to avoid slash­ing prices. Rick Seaney, CEO of FareCom­pare. com, says the air­lines are get­ting bet­ter at wav­ing sale prices in front of cus­tomers but sell­ing most seats at higher fares.

Usu­ally when air­lines start mak­ing money af­ter a slump, they’re tempted to add new flights to snag re­turn­ing trav­el­ers. This time might be dif­fer­ent. Slug­gish book­ings and con­cern about the weak eco­nomic re­cov­ery will put pres­sure on air­lines not to add flights that might op­er­ate half-empty.

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