Airline profits drop and passenger fees continue to rise: report

Higher fuel costs continued to take a bite out of the revenues of the nation’s largest commercial airlines, but billions of dollars in passenger fees are keeping the industry in the black, according to the latest financial data released Monday.

The profit margin for the nation’s biggest commercial airlines dropped to 6.8% in the period of July through September of 2011 from the 10.4% margin in the same period in 2010, according to a new report from the U.S. Bureau of Transportation Statistics.

A big reason for the drop, according to the report, is that fuel costs increased from 26% of the industry’s total operating costs in the third quarter of 2010 to 31% in the same period in 2011.

During the third quarter of 2011, the nation’s 21 major airlines, low-cost carriers and regional airlines generated nearly $2.7 billion in profits, nearly $1 billion less than they collected in the same period in 2010, according to the report.

Meanwhile, the federal statistics show that revenue from fees to check bags, change reservations, transport pets and charges for standby passengers, plus the sale of frequent flier awards miles generated nearly $2.4 billion in the July-through-September 2011 period, a 11% increase from the same period in 2010.

Airlines are not yet required to report other revenues, such as fees for the onboard sale of food, entertainment, pillows and blankets.

ALSO:

Airlines roll back latest fare hike attempt

Airlines set record low rates for lost baggage, bumped passengers

American Airlines vows to bounce back from bankruptcy