Fees Help First Quarter Airline Profits

The largest scheduled passenger airlines reported a 0.7 percent profit margin in the first quarter of 2012, up from the 0.5 percent loss in the first quarter of 2011, the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) reports.

As part of their first-quarter revenue, all U.S. passenger airlines collected $816 million in baggage fees and $631 million from reservation change fees from January through March 2012.

BTS reports that 10 of the largest airlines reported an operating profit margin as a group in each of the last four quarters, although the margin has declined in each of the last two quarters. As a group, they posted a profit of $228 million.

Losses were reported by American Airlines, which filed for bankruptcy, United Airlines, which was in the process of merging with Continental Airlines, and AirTran Airways, which was in the process of merging with Southwest Airlines. The 10 airlines carried 79.8 percent of U.S. airlines’ scheduled service passengers in the first quarter of 2012.

Baggage fees and reservation change fees are the only ancillary fees paid by passengers that are reported to BTS as separate items. Other fees, such as revenue from seating assignments and on-board sales of food, beverages, pillows, blankets, and entertainment are reported in a different category with other items and cannot be identified separately, BTS says.

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