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 Allianz Travel Insurance. The Allianz Travel Insurance company has built its reputation on partnering with agents all around the world to provide comprehensive travel insurance for their clients. Contact Allianz Travel Insurance for a comprehensive list of coverage.

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.

%d bloggers like this: