Airlines Are Making Money...Thanks To Consumers!!

If you’ve been reading the business news lately, you know that the airlines are back to making serious profits in the past two years.  Several factors have led to that financial bonanza.

One reason is that airfares have increased, after adjusting for inflation, according to an analysis by Associated Press of data from the Airlines Reporting Corp.  They have experienced a 10.7% increase over the past 5 years.

Another reason is that their yield management has proven productive by reducing the number of seats and trying to accommodate an increase in demand by persons who want to fly as a result of the economic uptick.

Another reason is that over the past five years they have been experiencing a boom in ancillary fees.  Paying extra for a piece of luggage or two, paying to board early, paying for additional leg and seat room, and paying for quickly avoiding the security lines have all contributed to some significant bonus money. For example, looking at the full-year numbers of 2012, American Airlines enjoyed $1,987,000,000 in ancillary fees, Delta claimed $2,576,660,000, and United outshined them all with $5,352,000,000.  If you can’t count that high. . .that’s billions of dollars!!!

In my opinion, another reason is the consolidation of airlines, hence the lack of competition for the passenger dollar.  We only have four major airlines in the United States now, American, Delta, Southwest, and United, and they control more than 80% of the domestic air market.

Here’s another reason.  Fuel prices are lower than in the past, 7.2% lower this year than last. Do you remember when they put in the “fuel surcharge” because the fuel was going up so much?  Well, have they taken away that fuel surcharge because of the reduction in their cost?  No. . . those savings are just added to their bottom line, on the back, of course, of the consumer.

And then another interesting happening is that Congress increased the TSA fees last month from $2.50 each way to $5.60 each way. But, the increased funds do not go to the benefit of TSA, rather those funds are funneled into the general budget.  Go figure!!

Interestingly enough, travel agents still do not get compensated for selling the airlines product, even though they enjoy our production.  We still service their (our) clients, but you can be sure we do it with a lot less promotion than when we were getting compensated for our work and counsel.  Try out our altruistic service at The Travel Factory, 4150 Southwest Dr., or call us at 698-1421. Our website is a good campsite: www.thetravelfactoryabilene.com.  We are the oldest agency in the Big Country, and one of the oldest in the state, so you can enjoy the benefit of over 100 years combined experience and be assured we will do our very best to serve your travel needs.