Airlines See Record Profits, Thanks to Fees and High Fares

Pity not the airlines.

This week, most U.S. airlines announced their operational and financial results for the second quarter. And they were nothing short of record breaking.

American reported net income of $864 million. But if merger-related expenses aren’t counted, the airline’s profit for the quarter would be $1.5 billion, its best ever.

In a wild swing from its previous quarter’s $609 million loss, United managed a record profit of $789 million for the latest quarter.

Delta’s profit for the period was $801 million, up 17 percent from the previous year and another record breaker.

Southwest’s second-quarter profit was $465 million, its best ever for the period.

And JetBlue’s net income for the quarter was $230 million, also a record.

That’s a lot of millions, a lot of records, and a lot of happy talk. The New York Times, in its reporting of the airlines’ strong performance, calls it “the start of a new era.” That remains to be seen.

What it is indisputable is a period in which the supply and demand for airline seats is in balance, giving the airlines the power to keep their fares at profit-generating levels. As it was succinctly put by Southwest’s chief Gary Kelly: “Demand is very strong, and it is balanced very nicely with the supply of seats. We’re going to manage our growth very carefully so that we don’t upset that balance.”

In other words, the airlines hope to keep flying their planes more than 80 percent full, and squeezing travelers for more fees and ever-higher airfares. That’s the proven recipe for financial success: Squeeze your customers.

If this is the new era, it’s no wonder that flyers are increasingly nostalgic for “the good old days.”

Reader Reality Check Miss the old days much?

This article originally appeared on FrequentFlier.com.

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