Airline profits soared in 2013

You won't believe how much carriers raked in last year. 'We have every fee known to man,' one fare-tracking expert says.

By Benzinga May 7, 2014 12:46PM
parked airplane © Sava Alexandru, Vetta, Getty ImagesBy Bruce Kennedy

There are more signs the U.S. airline industry has recovered from the double blows of the 9/11 terror attacks and the subsequent recession.


The 26 scheduled U.S. passenger airlines had a net profit of $7.3 billion in the fourth quarter of 2013 -- their third straight quarter of after-tax net profit -- compared to a loss of $188 million during the same time period a year earlier, the federal Bureau of Transportation Statistics (BTS) reported Monday.


And for the year, those airlines brought in a net profit of $12.7 billion, compared to $98 million in 2012.


One big factor for those profits was the growing number of fees the air carriers impose on their customers.


"We have every fee known to man," Rick Seaney, CEO and co-founder of Farecompare.com, tells The Los Angeles Times. "That tells you why there are profits now."

The passenger airlines reportedly collected nearly $800 million in baggage fees and $675 million in reservation change fees for the year, making up about 3 percent of their total operating revenue.


The BTS, meanwhile, points out those baggage and reservation change fees are the only ancillary fees reported to the Bureau as separate items.


"Other fees, such as revenue from seating assignments and on-board sales of food, beverages, pillows, blankets and entertainment are combined in different categories," it noted, "and cannot be identified separately."


Along with some recent, major mergers, the airlines have also been attending to their profits by cutting some routes and boosting capacity -- often by reducing the size of passenger seats.


But the industry says it still has a ways to go before it can truly say it has bounced back.


"It's worth noting, while finances for the U.S. airline industry are improving, we still lag the S&P 500 average profit margin, and face tens of billions of dollars in debt, which airlines are actively working to pay down," Jean Medina, spokeswoman for the trade group Airlines for America, said during an interview with The Times.


More from Benzinga

6Comments
May 7, 2014 2:38PM
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I actually don't mind the fees, because it is just a trick, if they didn't have the fees, ticket prices would be higher.  What pisses me off is that they are charging such high change fees nowadays, and FF miles are nearly worthless.  Both are blows to business travelers, who are their most important repeat customers... constantly getting gouged with the change fees, because business is faster and more subject to change than ever before. 
May 7, 2014 2:28PM
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I hate to fly but not because of the fees, it's because of the lack of comfort and the rudeness of other travelers. But in regards to fees. Yes they are making a lot of profit now, but remember all the losses they had last year and in other years. A lot of those profits will be put aside for the lean years that may be coming. And then there is the cost of fuel going up again.
May 7, 2014 2:29PM
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Pretty soon though, competitive free market pressure will force them to start cutting those fees. Right?
May 7, 2014 4:29PM
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It has cost them three flights this year just from me. They are also raising the price of tickets and leaving the fees in place. Just a little over a year ago I got bargin tickets for a little more than half of what they are now. Much less flying happening from this household. I only take a carry on if they have a fee for carry on I don't fly with them. I guess that means no trip to Hawaii this year Bah bye!
May 7, 2014 5:20PM
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I would much rather them raise ticket prices and restore service and comfort.  It now feels like a flying cattle car on most occasions with people trying to move in carry on luggage.
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