Stop Hating Your Airline: It Might Not Be Taking Advantage of You as Much as You Think
Does anyone really like to fly? It’s doubtful. Between actually getting on the plane — think airport security, airport parking, and airport delays — cramming yourself into your too-small seat, and having to use a telephone booth for a restroom, it’s just flat out unpleasant.
1. This is what your ticket price covers
According to The Wall Street Journal, an airline ticket today basically covers the cost of your actual flight, believe it or not. The baggage, seat selection, and cancellation and flight-change fees are what make money for airlines.
So obviously, try not to change your plans and pay extra — or buy a ticket you can change for free. As far as baggage goes, less is more. Some people take only a carry-on for a two-week vacation. If you must check your baggage, research opening an airline credit card that gives you free baggage check-in.
Next: Here’s what airlines made in 2017.
2. Airlines’ net profits for 2017
The magic number for airlines is the average profit per passenger. And the average profit per passenger of the seven biggest airlines was $17.75 in 2017 for a one-way flight. The average profit margin across those seven airlines in 2017 came to 9%.
The per-passenger profit, according to The Wall Street Journal, is approximately double what the International Airport Transport Association says airlines around the world make per passenger. Decide for yourself whether you think that’s fair.
Next: It’s all about the fuel.
American Airlines spent $1.3 billion more on fuel in 2017 than 2016, according to The Wall Street Journal — and that’s huge. The airlines’ profit margin for the year was only 4.5%, the lowest of the big seven airlines.
“Fares are too low for oil prices this high,” said Doug Parker, CEO and Chairman of American Airlines Group. “Over time you’ll see it adjust.” Oddly, in fall 2107 Parker said something completely different. “I don’t think we’re ever going to lose money again,” he said.
Next: The moneymakers
4. These are the most profitable airlines
According to the Chicago Business Journal, Airline Weekly tabulated data for the 12 months ending September 2016 for 72 global airlines. Three of the world’s four most profitable carriers — Allegiant, Ryannair, Alaska, and Spirit — turned out to be operators that offered rock-bottom fares and then charged extra for any “frills” a passenger might want.
The study found United Airlines was the least profitable of all U.S.-based carriers. Southwest came in No. 5, JetBlue took No. 6, Hawaiian was No. 10, Delta was No. 12, and American was No. 15.
Next: Southwest defies explanation.
5. How does Southwest do it?
Strangely, Southwest Airlines had the highest profit margin among the big seven airlines, according to The Wall Street Journal. Why is that strange? Because Southwest does not charge extra fees for checking in baggage. Still, its profit margin for 2017 was 16.5%.
Next: Here’s what 2018 has in store.
6. This is the profit airlines will likely make off passengers in 2018
According to an International Air Transport Association report, the airline might experience a record-breaking $38.4 billion in profits for 2018. Compare that with 2011’s profits of $4 billion.
The report pointed out though North American airlines carry less than 25% of the world’s traffic, they still make more than half of the industry profits. In 2018, the report projects that airlines will earn just $8.90 in profits from each passenger. Keep in mind that airlines are charged with the difficult task of keeping fares low enough to be competitive, making sure flights are full, actually moving people around the world, and making a profit. It’s a sky-high order.
Next: Air transport costs have plummeted.
7. You’re not paying much more to fly than you did in 1996
According to that same International Air Transport Association report, the inflation-adjusted cost of air transport for passengers is significantly less now that it was in 1996. In other words, the cost of airfare has dropped.
You likely remember taking flights “back then” that cost less, but you’re forgetting about inflation. Today, airlines have made the cost of flying more affordable through fuel-efficient aircraft and low-cost carriers and by cutting costs wherever possible.
Read more: 15 Secrets Airlines Don’t Want You to Know
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