Would airlines still be profitable if you stripped away fees?

Yes, but hardly.

The nine largest US airlines will collectively report $2.4 billion in quarterly profits on $33.3 billion in revenues next week, according to Robert Herbst of the site AirlineFinancials.com.

Elliott Advocacy is underwritten by Travel Insured International -- Travel Insured International is a leading travel insurance provider. For over 25 years, their goal has been to help each individual travel confidently. Some of the major travel insurance benefits provided by in their plans include Trip Cancellation, Trip Interruption, Accident and Sickness Medical Expense, and Baggage and Personal Effects coverage. Plans also include other non-insurance assistance services. In 2015, Travel Insured was acquired by Crum & Forster, whose parent company is Fairfax Financial Holdings Ltd. The financial strength and core values of the companies give Travel Insured the best position in the market to continue its commitment of helping individuals protect their travel plans. Travel Relaxed…Travel Secure…When you have Travel Insured.

By my calculations, those airlines will have collected $2.25 billion in ancillary fees during the same period. If those fees are all profit (and there’s an argument to be made that a lot of it is) then the industry would have made only about $150 million in the third quarter.

My estimate could be a tad high, actually. A recently-released survey from Amadeus and IdeaWorks estimated worldwide ancillary revenue at $22.6 billion in 2010, with $6.7 billion in fees collected by the major American airlines.

It’s still a lot. And it still begs the question: What if airlines had to quote an inclusive fare, because of new regulations?

Would passengers suffer from sticker shock and stop spending on tickets? Would the airlines start losing money again?

Now you know why airlines are lobbying so hard against regulation: It threatens their profitability.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: