Government statistics released this week show that the U.S. airline industry is achieving levels of profitability undreamed of in previous years. The question for consumers: How much of that money be spent on improving their air travel experience?
According to the Transportation Department’s Bureau of Transportation Statistics (BTS), the U.S. airline industry’s after-tax net profits hit $25.6 billion for 2015 – more than three times what they earned the previous year.
For decades, the airline industry has been characterized by historically low profit margins relative to other businesses; it usually stayed in the low single digits, and often it was a negative number. But for 2015, the industry’s net margin hit a record 15.2 percent, BTS said. That’s almost four times the 2014 margin (4.4 percent).
Airline revenues from fares dropped a bit last year, but revenue from passengers hit new records for things that used to be included in the fare – fees from checked bags rose to more than $3.8 billion, and revenue from ticket changes/cancellations increased to just over $3 billion. The biggest bottom line benefit came in fuel costs: for the past several years, the industry had been spending between $42 and $44 billion a year for fuel, but in 2015 they spent less than $27 billion.
And how will passengers benefit from the airlines’ good fortune? It’s true that the major carriers have been renewing their fleets with next-generation aircraft, but those purchases are usually governed by bottom-line considerations – mostly that they are more fuel-efficient. But they often cram in more seats with less personal space in economy, and they are turning to new “slimline” designs – which many passengers dislike — to save weight and to free up space for another row or two of seating.
And what about ground facilities? Major improvements are coming to some big airports, but the American Association of Airport Executives this week blasted U.S. airlines for their ”staggering disconnect” in continuing to oppose an increase in the passenger facility charges that Congress allows airports to collect for infrastructure improvements, while at the same time hauling in record passenger fees for themselves.
Airports also get money from the Airport and Airway Trust Fund, which is funded by the 7.5 percent excise tax on air fares. But AAAE noted that since 2008, the airline tactic of separating out baggage fees from ticket prices has cost that fund almost $2 billion in lost revenue.
Readers: Are you seeing an improved passenger experience as airlines wallow in record profits? What would you most like to see them spend money on that might make your life easier?
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