Major airlines post highest profit margin in eight years
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.