U.S. Network Airlines Report Highest 2Q Profits Since 2007

U.S. Network Airlines Report Highest 2Q Profits Since 2007

U.S. network airlines’ profit margin in the second quarter of 2010 was the highest since the second quarter of 2007 and the combined profit margin for the network, low-cost and regional carrier groups was the highest since the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) began tracking this data in 2002.

The six network carriers posted a profit margin of 9 percent in the first quarter with a combined operating profit of $2.4 billion. The seven low-cost carriers reported a 9.9 percent profit margin, the largest profit margin since the second quarter of 2006. The seven regional carriers posted a 6.1 percent profit margin.

As part of its second-quarter revenue, BTS also reported that the airlines collected $893 million in baggage fees and $594 million from reservation change fees from April to June. In addition to the fees, airlines reported ancillary revenue of $618 million from passengers and from other sources.

This revenue category includes revenue from frequent-flyer award program mileage sales and pet transportation fees. Total second quarter 2010 airline revenue from all ancillary sources that can be identified, including fees and frequent-flyer sales was $2.1 billion, with Delta Air Lines reporting the most at $682 million.

Other fees, such as revenue from seating assignments and onboard sales of food, drink, pillows, blankets, and entertainment are reported in a different category with other items and cannot be identified separately. The combined passenger fees and ancillary revenue from other sources constituted 6 percent of the total revenue of the 28 carriers that reported receiving ancillary revenue. Spirit Airlines reported the largest percent of operating revenue from ancillary revenue of any carrier at 24.2 percent.