Why are airline profits soaring?

[Hannah Bell]

WALL STREET is jumping up and down because airlines are making money again--big money. The nine largest U.S. passenger airlines posted cumulative net income of $1.45 billion for the three months ending June 30, according to Air Transport News. This is four times the income generated last year. These are not exceptions.

But how did airlines turn their fortunes around, and what does it mean for passengers and employees who can both arguably be described as long-suffering victims of greed in the sky?

Aside from mounting industry consolidation, which generates its own profit dynamic resulting from a monopoly of the skies, the profitable excesses are being accomplished the old-fashioned way: charging more fees and higher ticket prices, cramming more people into each flight and reducing service staff.

Labor costs at the five network airlines have fallen some 33 percent, or $16 billion, since 2003, according to analyst Cordle....

http://socialistworker.org/2010/10/26/why-are-airline-profits-soaring

[ixion]

1. Airline travel, which I used to find enjoyable, has now become a nightmare

and the Big Nine, as it were, can all go rot in hell along with the TSA.

[customerserviceguy]

6. And those jam-packed cattle cars

are another reason for profits. I once flew between Seattle and NYC on a flight 30 years ago that had only one out of every ten seats filled, they had to lose money on that one. When you can cancel flights, and pack 'em in, then you start to see the profits of full capacity.

[jeanpalmer]

2. Also, they outsource their maintenance

to Taiwan or El Salvador. Or they import cheap foreign labor through the visa program.

[BlueCollar]

3. merican Airlines still does 100% in house...

All heavy airframe maintenance is done in house at Tulsa or Fort Worth. Engine overhaul also. Some component work is outsourced but most of it is also done in house.

[DailyGrind51]

4. Fees for damn near everything!

[customerserviceguy]

7. And yet, they're still missing one obvious fee

Children ride for half price, and lap babies for free. If any airline did away with that, adults like me who don't want to put up with screaming seat-kickers would gladly make that our exclusive way to fly, even if the tickets cost 10-20% more.

[TBF]

9. I agree -

I'm a mom and have always paid full price for my kids. It was so much easier to bring their car seat along (ie put them in a car seat with a bottle - they actually do allow the pre-maid formula bottles if they're sealed - and let them fall asleep). Most babies will fall asleep much faster in their car seat than being bounced in someone's lap. Safer for the kids, you have the car seat at the destination for your rental car, and other passengers don't have to listen to a fussing baby.

[maryf]

5. The workers united

both the employees and their customers, is a good ploy, across all spectrums.
Something I didn't see (read quickly) is that the cut in health care benefits, salaries, etc. that have occurred are a huge part of the labor costs that have been saved (all to protect the corporations from profit loss), benefits have been cut drastically, even for long timers in the past couple years...K&R

[Lucky Luciano]

8. In 2008, they went into survival mode and cut capacity like crazy.

They are not flying half full planes. They are full now with fewer flights. There are other reasons, but the capacity cuts and baggage fees are what took them from imminent bankruptcy to profit. All the major airlines had their CDS trading at over 70 points up front 2 years ago! That is virtually bankrupt. Amazing that they recovered.

[TBF]

10. They also raised prices -

Now that there are fewer flights the prices are higher. We are a family of four (and I don't believe in babies on laps - mine fly in their car seats) so I noticed when prices jumped.

I could do away with the security "procedures" though. I'd rather they put up a couple of big x-ray machines for everyone to walk through (same with bags). That is the worst part of the process - having to unload all the electronics, take shoes off, and still try to hold on to our kids. At some airports they have a line for families that makes it a little easier, otherwise you always feel like you're holding everyone else up while you try to get everything exactly the way the airline wants it.

[Lucky Luciano]

12. Yes..the lower capacity was done to increase prices and stop flying half empty planes.

Half empty planes are also a waste of fuel and bad for the environment.

[blindpig]

11. It's a zero sum game

As value is derived from labor their profit can only be our loss.