The aviation world is a funny beast – one in which losing money has come to be expected, and losses are all part of “doing business”. The past couple of years have been exceptionally tough for the US legacy carriers – but big changes in how they do business seem to be paying off.
US Airways earned $28 million on revenue of $2.91 billion – up nearly 11%. United Continental issued its first numbers after finalizing the merger of United Airlines and Continental Airways, and impressed analysts with a 15% increase in revenue – $8.43 billion. Of that amount, no profit was left, and the airline closed the quarter with a $325 million loss – but since this was less than analysts had expected, losing “just” $325 million was considered good news.
The cause of these jumps in revenue can be traced back to a number of changes – the first of course pointing to the most annoying one – fees. US Airways generated $388 million in baggage fees alone in the third quarter of 2010. United Continental took home $497 million in the same period. And yes – this is just on baggage fees in one quarter!
Another important change is one that helped reduce costs very quickly – flying less. Airlines removed non-profitable routes from their networks, and reduced flights on others. The end result is something every airline executive likes to see – full planes, higher fares and lots of people paying luggage fees.
In removing routes, airlines also paid close attention to the type of planes being used – less efficient planes were taken out of service and replace by more efficient models. By doing this, airlines managed to use 11.9% less fuel compared to the same period in 2009.
Bottom line – things are looking up for the airlines and we all need to realize that fares will go up, fees will go up and flying will be just as uncomfortable as ever.
[Photo: Getty Images]