Global airline industry soars toward recovery ($2.5B profit in 2010: Better or worse service ahead?)

CNN Money ^ | 06/07/2010 | Aaron Smith

[SeekAndFind]

The global airline industry is expected to pull out of its slump and make its first profit in three years, according to an industry group report Monday.

The International Air Transport Association said that it expects to make a profit of $2.5 billion in 2010, its first since 2007.

[SeekAndFind]

I cannot help but feel that airlines are profitting BECAUSE they’re cutting services to customers.

Think about it — no snacks or food for certain distances, having to pay for carry-on luggages, etc.

In other words — they profit even as your travel becomes less comfortable.

Is there an alternative I have other than having to go through the airports ?

[sionnsar]

Is there an alternative I have other than having to go through the airports ?

Stay at home, drive, take Amtrak.

[SeekAndFind]

Stay at home, drive, take Amtrak.

That means I don't get to see my folks in Hawaii.

As for Amtrak, they're as bankrupt as GM.

[Erik Latranyi]

I cannot help but feel that airlines are profitting BECAUSE they’re cutting services to customers.

Most have restored those services and stopped charging for bags.

I am OK with a company that is profit-focused. I pay for a ticket to get to my destination, not to have a meal or be able to carry a truckload of personal belongings.

[longtermmemmory]

that is difficult when you travel outside of the usa. Also, for business you are wasting a days of earning money because of driving to destination.

[sionnsar]

That's my point -- though I forgot to name Greyhound.

I live in the Seattle area and much of my travel is to points east of the Mississippi (which includes Europe). But even my west coast travel is to locations beyond a full day's drive (and I don't mean a mere 8 hours' drive -- that doesn't even get me beyond Oregon).

[sionnsar]

Book a room on a freighter, if you really don't want to fly.

My grandmother used to travel that way. Her recommendation: always choose a freighter with a German chef.

But it's no longer a cheap way to go.

[Alberta's Child]

I attribute this to three basic things: (1) consolidation in the industry (see United/Continental merger) and in individual airlines (elimination of routes, service reductions, etc.); (2) higher revenues from higher fares and additional fees; and (3) slightly lower fuel prices.

[SeekAndFind]

RE: slightly lower fuel prices.

---

This looks to be a very cyclical type of business. If fuel prices go up, they’re going to be struggling again.

Makes me wonder why entrepreurs bother putting their money into this type of business....

[frposty]

I can see the value of regulations preventing airlines from keeping passengers imprisoned on grounded planes for many hours, but pricing and services offered can be left to the free market.

I don’t fly much, but buying meals on the ground and eating them in the plane is fine with me. Paying extra for luggage can’t be evaluated alone. The total price for the trip is what counts. If the airlines are giving prices that don’t include luggage fees, and don’t disclose the luggage fees in their pricing statement, perhaps that’s deceptive advertising and covered by existing statutes.

Geez I just don’t want more laws.

[SeekAndFind]

Well, Airlines going back to profitability is certainly good news.

It looks like people are travelling again ( but not in Europe ).

This indicates to me that business is picking up. Think about it, airlines profitting tells us that tourism, travel, hotel accomodations, business trips, etc. are starting to soar.

This can only mean good news ( I hope ).

[Alberta's Child]

One good reason for putting money into the airline industry is that a lot of the costs associated with their operations are carried by government (the FAA, for example) or by quasi-public entities (e.g., airport authorities, etc.).

[Alberta's Child]

Profitability does not necessarily mean increased travel. I think most airlines have achieved this profitability by scaling back on their service in addition to raising fares.

[SeekAndFind]

Is there a good conservative case for privatizing airports ?

[Alberta's Child]

There might be. One of the problems with privatizing airports is that they are very similar to government-run transportation assets in many ways. Airports could probably not exist if they didn't have the power to use eminent domain to secure property for initial construction and expansion, for example.

Up until a couple of years ago Stewart Airport in upstate New York was the only major privately-operated airport in the U.S. It was the former Stewart Air Force Base, and after it was decommissioned it was turned over to a New York State agency that leased it to a private operator. The private operator (I think it was a British company) struggled for a few years, then sold the lease to the airport authority for the New York City region.

It would be tough to privatize major airports on a case-by-case basis. Either they all operate privately, or none of them do.

[Tzfat]

Most have restored those services and stopped charging for bags.

Every major airline charges for luggage. It is worth $1.5 billion + per year. That will NEVER go away. The fact is, the average airline ticket today, adjusted for inflation is cheaper than it has EVER been before. Want to compare? Back when there were meals and no extra charges, just 20 years ago, the average cost of a ticket was over 50% more when adjusted for inflation. You get what you pay for, which is: SAFE TRANSPORTATION FROM A TO B.