Airlines have best quarter ever … thanks baggage fees!

by Tom Johansmeyer on

Every time you pay to check an extra bag you’re making someone’s life better. The latest data from the U.S. Department of Transportation reveals that the third quarter of 2010 was the most profitable for the U.S. airline industry since the department began keeping score in 2002. The industry’s operating profit margin hit 10.5 percent in aggregate. Low-cost carriers, as a class, had an operating profit margin of 11 percent, its best performance since hitting 11.2 percent in the third quarter of 2006.

How did the airline industry pull this off? Recovering economic conditions helped, of course, but so did the stuff that passengers have gotten comfortable complaining about. More than $900 million in third-quarter revenue came from baggage fees, with another $590 million from reservation change fees. Then, there was another $646 million in ancillary fees. It all adds up to more than $2 billion for a single quarter.

So, while we’re all complaining about these extra fees, it looks like many of us are paying them, too.Spirit picks up the highest percentage of its revenue from ancillary fees at 26.9 percent, up from 24.2 percent in the second quarter of 2010 and 20.6 percent in the third quarter of 2009. Allegiant was next at 9.7 percent. Delta and US Airways derived 7.7 percent of their revenues from ancillary fees, with Southwest at 6.7 percent.

Of course, the money isn’t just going into the pockets of airline employees and executives. The six network airlines spent 25 percent of their operating expenses in the third quarter on fuel. United Airlines spent the most on fuel among network carriers – 25.7 percent of total revenue – with Allegiant leading low-cost carriers at 44.1 percent.

Before you feel too sorry for airlines when it comes to fuel costs, remember those profits. Four network airlines had double-digit operating margins, along with four low-cost carriers.

[photo by Tracy O via Flickr]

The 10 easiest ways to improve air travel this holiday season

by Tom Johansmeyer on

It’s time for you to drag your screaming kids, annoying spouse and endless amounts of overstuffed bags through the airport, as you find your way over the river and through the woods. Thanksgiving is behind us, and that’s the really ugly time to travel, but Christmas is no picnic either. The gate areas and bars will be crowded, and it’s going to be awfully hard for you to be happy while darting from Point A to Point B.

How nice it would be if we could all follow some fairly specific rules designed to keep each other from blowing up – and make all our travel experiences far more efficient. Just under a week after I started at Gadling, two years ago, I wrote six ways to “[m]ake your flight (and mine) easier this holiday season.” As we approach Christmas, this list is definitely worth another look.

In the 700+ days since writing that post, I’ve done more flying and more travel writing. Consequently, I’ve accumulated a bit more knowledge … and a handful of additional pet peeves. A lot has changed since late 2008. The global financial crisis, originally putting severe pressure on the travel market, has given way to something of a recovery, forcing airlines and online travel agents to compete head to head for your business. And, even though ticket prices are up 13 percent year over year, they are still far below peak levels — and may be at their lowest in 15 years. In some environments, pricing is even flat year over year.

So, it makes sense to revisit this issue. Below, you’ll find 10 ways to make holiday travel a lot better for everyone:

%Gallery-7858%

1. Know what you’re getting into: be ready for poor service, big crowds and unreasonable people (from passengers to crew members). It is what it is. Lamenting the social injustices committed will get you nowhere, and you’ll become the barrier to progress that you so despise already.

2. Pay the damned extra baggage fee: the overhead bins will be full. Even though airlines are adding capacity as the travel market recovers, they’re not being generous. So, be realistic about the size of the bags you try to cram overhead or under seat – and expect the rest of the people on the plane to have the same overhead plan. If everyone were more realistic from the start, flying would be much, much easier.

3. Bring stuff to keep the kids busy: don’t expect young children to be reasonable – they’re young children. I have enough trouble staying reasonable, and by all chronological measures, I’ve been an adult for a while. If you have kids, it is your job to entertain them (or help them entertain themselves). It may take a village, but you left that at home.

The problem with people today is they have to be entertained 24/7. That’s why they’re at their worst on the airplane.less than a minute ago via webHeather_Poole
Heather_Poole

Also, check this out from a couple of years ago:

Forget every rule of good parenting. Sometimes, you need to let your kid cry to learn a lesson. Here’s the problem: we don’t need to learn that lesson, too. Do what it takes to keep your kid under control. If that means coloring books, candy or … dare I say it … active parenting, do it. Do what it takes. Your round trip involves two days of your kid’s childhood. Whatever you do for the sake of expediency will not make a lasting impression.

4. Pay attention to the flight attendants (for a change): look, do you want to be responsible for creating the next Steven Slater? Of course not. Even if you are forced to deal with unreasonable requests demands from them – not to mention horrid customer service – it’s a lot easier just to play ball. Save your fights for truth, justice and the American way for a flying season that isn’t insanely busy. In the end, doing battle with a nutty flight attendant is only going to keep you from getting to your destination and away from the plane as soon as possible, so it makes sense to sacrifice your principles.

Add to this my advice from a while back:

Know when to quit. We all love to scream at airline employees, and we know they are lying to us. When they say that weather caused the problem on a sunny day, when they say that there are no more exit row seats, when they say the flight is overbooked … we just know it’s bullshit. So, we fight. Sometimes, it works. Appeasement in the form of flight vouchers, hotel stays and free meals sometimes flow. But, at a certain point, you need to know when to stop. If you’re on a full flight of people with super-triple-platinum status (and you’re not), don’t expect to get a damned thing. Accept that you will lose.

Fighting the good fight is okay, but at a certain point, you lose the crowd’s sympathy. Be aware that people who look like serial killers don’t often get what they want (or need).

5. Keep your mouth shut: don’t share your life story with gate agents, TSA employees or anyone else. Nobody cares. Even if you do forge a momentary connection, it will have evaporated by the time you’re stuffing a stale Nathan’s hotdog into your once-talking mouth.

6. Step into the damned body scanner: the whole “opt-out” thing didn’t work right before Thanksgiving. So, it’s time to give up on this. You’ll live. There were no reports of people growing extra heads because they went through the body scanners a month ago. And, the odds do seem awfully low that your pictures will wind up on some strange airline-fetish porn site.

Seriously, just deal. Okay?

7. Be smart at the security checkpoint: this is an important one, because it’s so easy to cause the line to back up. I’m just going to plug in my suggestions from Christmas 2008:

Don’t prepare for the security stop when you’ve already bellied up to the X-ray machine. While you’re in line, do the following:

1. Pull your laptop out of your bag (if you have one)
2. Take your ID (license or passport) out of your pocket, bag, etc.; hold it with your boarding pass
3. Empty your pockets into your carry-on; do the same with your watch, cell phone and any heavy jewelry
4. Remove your shoes, and carry them on top of your laptop
5. Repeat #4 with your coat and hat

Now, you have a stack of personal belongings on top of your laptop. Carry them like you did your books back in grade school. You can drop the laptop into one bin for the X-ray machine, pick up the clothing and drop them in the next bin. It’s fast. It’s easy. It doesn’t leave you screwing around while people are waiting.

8. Look at the rules in advance: know what you can get through airport security and what you’ll have to check or leave behind. We’re in the internet age, so it’s not like you need to fax a request to the TSA or drive to the airport to scope out the signs. And, I’ll even make it easy for you: here’s the TSA list of prohibited items.

9. BYOB on the plane: whether it’s burgers or booze, take care of it ahead of time. Make your purchases at the food court or pack them at home. If you don’t be ready for whatever is being served on the plane. Have the appropriate form of payment ready. Keep in mind that airline food tends not to be terribly healthy, so if you want to keep your arteries clear (or clog them even more aggressively), take control of your culinary future.

10. Stay flexible: some situations will be within your control, but many will not. Understand what you can change and what you’ll have to live with, and the process will get a lot easier for you.

[photo by The Consumerist via Flickr]

Delta: single large airline looking for Virgin partner

by Tom Johansmeyer on

I hope you haven’t become too attached to Virgin Atlantic. The airline has gotten its share of calls lately about potential mergers, but they are qualified with expressions like “early stages” and “far too early” to say anything about. This isn’t all that surprising, given the strength of its brand and the fact that the airline hired Deutsche Bank to help it evaluate its available growth opportunities.

Word on the street is that Delta is sniffing around, but neither Delta nor Virgin Atlantic would say anything about it.

The notion of a merger with an airline of Delta’s size is interesting, as majority owner of Virgin Atlantic, Sir Richard Branson, didn’t have much in the way of positive commentary for the British Airways/Iberia deal, which he believed would lead to higher prices and lower competition.

But, the aviation business is feeling the urge to merge, and analysts are saying that Virgin Atlantic needs a big buddy in order to compete effectively, the BBC reports.

[photo by eisenbahner via Flickr]

Which airline made the most money on baggage fees?

by Tom Johansmeyer on

Last year, baggage fees were used by airlines to make up for lost fare revenue, as the recession kept people on the ground. This year, it’s just been a great source of extra revenue, as passenger traffic and fares are up – and the fees haven’t gone away. Almost all airlines are getting in on the action, some more egregious than others.

Well, data for the third quarter of 2010 is in, and we can finally take a look at who’s hitting us hardest … and for how much. The numbers will probably shock you. The top baggage fee-grabber owned close to 30 percent of the total baggage fees charged in the United States, a market that has reached $2.6 billion for the first three quarters of the year, and the top five dominate with approximately 80 percent of the total fees charged for bags, according to data from the Department of Transportation.

Let’s take a look at the top five airlines for baggage fee snatching (and then the rest):1. Delta Air Lines, $733 million: in fairness, Delta is the largest airline in the United States, so it’s to be expected that it will generate the most revenue.

2. American Airlines, $431 million: the third-largest airline hits the #2 spot for baggage fees, implying an aptitude for prying open customer wallets yet to be recognized by its competitors.

3. US Airways, $388 million: again, this is an impressive take, as evidenced by the distance between US Airways and Continental, in the #4 spot.

4. Continental Airlines, $258 million: this almost makes the airline look downright reasonable, especially when it’s year-to-date baggage fees aren’t even as substantial as what Delta raked in during the third quarter alone!

5. United Airlines, $239 million:

And, the rest:

6. AirTran Airways: $112 million

7. Alaska Airlines: $81 million

8. Spirit Air Lines: $56 million

9. Frontier Airlines: $44 million

10. JetBlue Airways: $43 million

11. Allegiant Air: $43 million

12. Hawaiian Airlines: $40 million

13. Virgin America: $27 million

14. Southwest Airlines: $23 million

15. Republic Airlines: $18 million

What’s the latest news with the airlines? Click here to find out!

16. Horizon Air: $13 million

17. Sun Country airlines: $9 million

18. Mesa Airlines: $2 million

19. Continental Micronesia: $2 million

20. USA 3000 Airlines: $2 million

[photo by The Story Lady via Flickr]

Airlines, airports and passengers: nothing but gains this year [INFOGRAPHICS]

by Tom Johansmeyer on

There are a whole lot more of us flying this year: 4.3 percent more, to be exact. That’s the increase in domestic air traffic from September 2009 to September 2010, according to the latest data from the U.S. Department of Transportation. In that month, U.S. airlines had 57.3 million passengers, leading to the largest year-over-year gain since September 2007. Meanwhile, international passenger traffic on U.S. flights surged 9.4 percent year over year.

For the first three quarters of 2010, scheduled domestic and international passengers were up 1.5 percent, suggesting that the recovery has gained momentum throughout the year. Domestic passengers gained 1 percent, with international passengers up 5.3 percent. Relative to 2008, though, passenger traffic is off 6.8 percent.

So, who wins? Of course, the airlines have had a relatively fantastic year, especially the worst of them. Delta, considered bottom of the barrel, surged from #3 in September 2009 to #1 in September 2010, with more than 9 million enplaned passengers, up 68.6 percent year over year (but don’t forget that the Northwest merger plays a role in this. Delta‘s also the top dog for the first nine months of the year for the same reason, followed by Southwest, American Airlines and United Airlines.


Atlanta Hartsfield-Jackson International Airport remains the busiest in the United States by a considerable margin. Close to 32 million passengers passed through in the first nine months of 2010, an increase of 1.1 percent year over year. Atlanta led Chicago O’Hare, which came in second, by more than 9 million passengers so far this year. For the greatest gains, look to Charlotte: it was eighth on the list but posted a growth rate of 6.5 percent YTD.

Las Vegas was the only airport in the top 10 for the first nine months of 2010 to post a year-over-year decline. The number of enplaned passengers dropped by a rather substantial 3.6 percent year over year, hardly surprising given the fact that the Las Vegas tourism business has been slammed by the recession. Also, outbound traffic from Las Vegas is likely constrained by the local economy, which has been battered pretty badly (as real estate prices indicate).


Even though the number of passengers increased for airlines and airports, the number of flights operated slipped 1.2 percent from the first nine months of 2009 to the first nine months of 2010. Likely, the airlines were tightening up their flights, making better use of available seats and cutting expenses.

[photo by Yaisog Bonegnasher via Flickr]