Airline Profits Up 64 Percent, Bag Fees Generate $900 Million in 2nd Quarter

(Los Angeles Times/MCT) -

The airline-industry strategy of packing cabins to record levels, charging fees for bags, food and entertainment, and merging to reduce competition continues to pay off.

The nation’s airlines posted $3.6 billion in profits in the April-June period, a 64 percent increase compared with the $2.2 billion in profits earned in the same period last year, according to new federal data.

About a quarter of the $44.6 billion in revenues in the second quarter came from bag and other passenger fees, according to the Bureau of Transportation Statistics.

The airlines collected $900 million in bag fees and $753 million in reservation-change fees, according to the federal agency, which does not collect data on other passenger fees, such as charges for the sale of food and entertainment.

While revenues from fares and passenger fees rose by nearly 8 percent in the second quarter, compared with the same period last year, fuel costs remained flat, with labor costs rising about 8 percent, federal statistics show.

Airline-industry experts attribute the strong financial numbers to carriers filling almost every available seat and collecting fees for a long menu of on-board extras. In June, 87.4 percent of the seats on domestic flights were full, a new record for the industry.

The nation’s largest airlines collected $3.3 billion in checked-bag fees for 2013, compared with $1.1 billion in 2008.

Once the merger of American Airlines and US Airways is completed, four of the nation’s carriers will control about 80 percent of all domestic air traffic, according to federal studies.