Mon | Sep 25, 2017

Airlines bring in more money from fees

Published:Wednesday | May 6, 2015 | 5:00 AM

United States airlines are earning billions, and they are collecting more in fees on checked bags and reservation changes.

Whether airlines are making more or less profit than before depends on which figures you use, although the parent company of American and US Airways comes out on top either way.

The Department of Transportation said on Monday that airlines collected US$3.5 billion in bag fees last year, a five per cent increase over 2013, and US$3 billion in reservation-change fees, a six per cent hike.

Fees began escalating in 2008 when airlines were losing money and facing a sharp rise in fuel prices. Today, they make up a growing share of airline revenue.

At Spirit Airlines, which touts low fares and adds lots of fees, only 63 per cent of its revenue comes from fares. Southwest still lets customers check two bags or change a reservation for free; it gets 95 per cent of revenue from the ticket price.

Jean Medina, a spokeswoman for the industry trade group Airlines for America, said that fees let airlines charge customers for things they value while keeping base fares low. She said airlines are using "modest" profits and savings from lower fuel prices to invest in new planes and facilities and to reward employees and

shareholders.

Net income

Net income at the 27 airlines counted by the government fell to US$7.5 billion last year from US$12.2 billion in 2013. However, net income can include one-time gains or losses, and analysts usually prefer to look at operating profit. On that basis, the airlines did even better in 2014 than 2013 - pretax operating profit rose to US$14.6 billion from US$11.3 billion.

American Air Group Inc had the highest revenue, net income and operating profit.

- AP