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