Monday, September 20, 2010

Airlines' Bag-Fee Revenue Soared Again in 2Q

[UPDATED: With ATA report on 17 pct revenue growth, fare increases, in August]

Airlines made $892.8 million on charging for checked bags in the second quarter of this year. That's a 33.3 percent jump from the second quarter of last year, says the Transportation Department's Bureau of Transportation Statistics.

[And remember, the largest domestic carrier, Southwest, does not charge for checked bags, making the take of the others even more noteworthy.]

Airlines took in $594 million in penalty fees in the second quarter from customers who changed itineraries, the BTS said. That's down 2.1 percent from the 2009 second quarter -- though the two biggest network carriers, Delta and American, had gains of 80.5 percent and 10.4 percent, respectively, in that fee category.

Overall, so-called ancillary revenue, which includes bag and change-penalty fees as well as other sources such as the sale of frequent flier miles tocredit cards (but excludes revenue from things like in-flight food and drink), rose 15.8 percent to $2.1 billion in the second quarter, BTS said.

By all measures, airlines are now in the black, as positive financial trends continue.

According to the BTS second-quarter report, meanwhile, the network airlines' profit margin in the second quarter of 2010 (9 percent higher) was the largest since the second quarter of 2007, while the combined profit margin for the network, low-cost and regional carriers was the highest since the BTS began issuing quarterly airline financial numbers in 2002, the agency said today.

And more up to date, the Air Transport Association of America (ATA), the industry trade organization for the leading U.S. airlines, today reported that passenger revenue, based on a sample group of carriers, rose 17 percent in August compared to the same month in 2009, marking the eighth consecutive month of revenue growth. The pace of improvement slowed from the 25 percent and 20 percent year-over-year gains realized in June and July, respectively.

About one percent more passengers traveled on a sample of U.S. airlines in August while the average price to fly one mile rose 14 percent. International passenger revenue rose 27 percent, led by a 44 percent gain in trans-Pacific markets.

"Spending on air travel remains well above last year’s depressed levels, but the industry is wary of a possible slowdown in the nation’s economic recovery as it enters the traditionally slower fall period," said ATA President and CEO James C. May.

According to the BTS second-quarter report, meanwhile, the network airlines' profit margin in the second quarter of 2010 (9 percent higher) was the largest since the second quarter of 2007, while the combined profit margin for the network, low-cost and regional carriers was the highest since the BTS began issuing quarterly airline financial numbers in 2002, the agency said today.

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1 comment:

ChefNick said...

Well, it's nice to see that airlines are doing better, but not nice that the quality of service has deteriorated to, like you said earlier, the nickel-and-dime point.

Still, it was only to be expected. Just like now it's a luxury to travel on the Queen Mary, it was bound to happen that flying on an airplane would eventually become a pedestrian activity, somewhat like riding in a taxi.

"Where to, sir?" has become the New Reality.