Ma­jor air­lines post high­est profit mar­gin in eight years

Dayton Daily News - - BUSINESS - By John Nolan Staff Writer

In the third quar­ter, ma­jor air­lines posted their high­est profit mar­gin in eight years of record­keep­ing by the U.S. Bureau of Trans­porta­tion Statis­tics, while low-cost car­ri­ers posted their sec­ond-high­est profit mar­gin dur­ing that pe­riod, the govern­ment re­ported Mon­day.

A group of six ma­jor air­lines re­ported an op­er­at­ing profit mar­gin of 10.5 per­cent dur­ing the July-to-Septem­ber quar­ter. It was only their sec­ond col­lec­tive profit since the third quar­ter of 2009, ac­cord­ing to the bureau.

The group of seven low-cost car­ri­ers re­ported an op­er­at­ing profit mar­gin of 11 per­cent, sec­ond only to 11.2 per­cent dur­ing the third quar­ter of 2003, the govern­ment said.

Since be­ing bat­tered by higher fuel prices and a busi­ness dropoff af­ter the 2001 ter­ror­ist attacks, U.S. air­lines have started charg­ing fees for bag­gage and reser­va­tion changes, and shut­ting down un­der-used flights. The profit re­port re­flects what the air­lines have been do­ing, avi­a­tion in­dus­try con­sul­tant Michael Boyd said.

“They’re do­ing well. There’s no ex­cess ca­pac­ity out there,” said Boyd, pres­i­dent of Boyd Group In­ter­na­tional Inc. in Ev­er­green, Colo. “An air­line is in the busi­ness of mak­ing money, not car­ry­ing pas­sen­gers.”

It rep­re­sents a long-term change for con­sumers, who ben­e­fited from lower fares dur­ing the in­tensely com­pet­i­tive air travel mar­ket of prior years, Boyd said.

“The con­sumers got good deals be­cause the air­lines were fight­ing with each other,” he said. “The losers were in­vestors and em­ploy­ees. Those days are over.”

As part of their July-to-Septem­ber rev­enue, the air­lines col­lected $906 mil­lion in bag­gage fees and $590 mil­lion from fees to change reser­va­tions, the govern­ment re­ported. The car­ri­ers had ad­di­tional rev­enue of $646 mil­lion from fre­quent-flyer pro­gram mileage sales and pet trans­porta­tion fees. The ma­jor air­lines in­cluded in the govern­ment’s re­port are Alaska, Amer­i­can, Con­ti­nen­tal, Delta, US Air­ways and United. The low-cost car­ri­ers are AirTran, Al­le­giant, Fron­tier, JetBlue, South­west (which does not charge bag­gage fees), Spirit and Vir­gin Amer­ica. Con­tact this re­porter at (937) 225-2242 or jnolan@Day­tonDai­lyNews.com.

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