Airlines are profiting on your indecisiveness and poor packing skills

Despite rising costs, airlines continue to make a profit by charging a number of fees instead of increasing base ticket prices.

Over the last year, the nation’s largest airlines managed to land a $15.5B profit — $4.6B of which came straight outta your baggage fees and $2.9B of which came from your flight change fees, according to the US Bureau of Transportation Statistics.

Airlines are profiting on your indecisiveness and poor packing skills

As labor and fuel costs increase, airlines get creative — and often downright manipulative — to create profits out of thin air.

Costs are climbing faster than airlines can grow

Fuel costs have risen more than 23% from 2016 to 2017, and labor costs increased 9% — shaving the money airlines make off each customer down to just $17.75 per flight. 

Industry profits are down 41.3% from their 2015 high of $26.4B — but airlines still squeezed out an after-tax profit for the 5th year. So with 4.5% to 16.5% margins, how did airlines still manage to add 450 planes to their fleets? 

Fees are the fuel keeping profits in the air

Airlines are happy to break even on ticket prices — as long as they can charge extra for everything from extra baggage to a glass of water. 

Baggage and change fees alone account for $7.5B of airlines’ $15.5B profit, but the USBLS doesn’t collect statistics on other in-flight charges (food, movies, legroom) — meaning fees probably account for more than 50% of overall profit.

While reliance on fees over ticket sales reduces profit when fuel prices spike (like now) — when costs decrease, profits are ready to take off.

Topics: Airlines

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