Airline profit margins and revenue from fees soar
Airline profit margins in the second quarter of 2010 were the highest since 2002, according to financial data released Monday.
But the numbers released by the U.S. Bureau of Transportation Statistics were no surprise to airline analysts, who noted that airlines have been cutting expenses, flying planes at the highest capacity in years and collecting record revenues from baggage fees and other extra charges.
For the April-to-June period, the nation's airlines reported a 9% profit margin, or $3.09 billion, according to the Bureau of Transportation Statistics quarterly report.
The most profitable segment of the industry was low-cost airlines, such as Southwest Airlines and JetBlue Airways, which reported an average 9.9% profit margin. Larger network carriers such as American Airlines, Delta Air Lines and United Air Lines reported average profits of 9% for the quarter, while regional airlines, such as American Eagle and SkyWest, reported profits averaging 6.1%
In the same period, the nation's 10 biggest airlines collected $2.1 billion in fees for checked bags, reservation changes, transporting pets and other extra services. That's a 16% increase over the same period in 2009, according to the bureau's financial report.
Robert Herbst, an independent airline analyst, said the increased profits are a positive sign for an industry that has lost $19 billion over the last 20 years.
"They have a lot of money to make up," he said of the airlines.
Herbst said airlines boosted their profit margins by eliminating low-profit routes, parking unused airplanes and flying planes closer to capacity than ever before.
In June, the nation's airlines filled an average of 86.2% of their seats, the highest of any June on record, according to the Bureau of Transportation Statistics.
The extra fees also contributed to the high profit margins, Herbst said.
Revenues from such fees constituted an average of 6% of the total revenues of the 28 carriers that reported such income. Spirit Airlines reported that 24.2% of its revenue came from such fees, the highest rate of any carrier, according to the bureau's financial report.
-- Hugo Martin
(Photo: An American Airlines plane takes off from Los Angeles International Airport. Credit: Los Angeles Times.)