US airlines cap a big year with fare hikes
Warren Buffett once joked that he wished someone had shot down the Wright Brothers at Kitty Hawk, North Carolina, when they made the first flight, and kicked off one of the most impossible financial industries of all time. Aviation can't make money, Warren claims.
Well, he should look the other way.
Turns out, in a year or air angst (with cursing flight attendants, FDA discovering cockroaches and pink slime at airline food caterers, American Airlines' ongoing tiff with online booking sites, passenger outrage over fees and pat downs) that 2010 was a remarkably good year to be an airplane.
As airlines post their annual earnings here in the US, it's expected the top eight airlines will report profits of about $4 billion, and the number's expected to rise in the next two years. The biggest year for aviation since before 9/11.
But don't expect 2011 to always be good for passengers. Fares have risen 14% in the past year, planes are more crowded, and top airlines have already increased their fares $4-10 on roundtrip flights since mid December.
Why? Per Delta's fourth-quarter earnings, it wasn't snow delays but increasing fuel costs that made their year-ending profits less than expected. Delta reported they lost $45 million from the 'snowmaggedon' at the end of 2010, while fuel costs rose about $220 million from the same period of 2009.
Fuel costs this month, per the IATA, are already up 16.5% from last year; the agency expects costs to rise by $0.20 this year, perhaps peaking around spring break.
And don't expect those pesky extra fees to go anywhere. Per the Bureau of Transportation, baggage and change fees (fees that didn't exist not long ago) will account for nearly $6 billion in 2010, more than what the top airlines will make for the year.
What's next, passenger-passenger fees if you want to chat during a flight?
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