Airline Profits Rose Nearly 11% in 2017, Baggage Fees Up 45%
U.S. airlines posted a fifth straight profitable year in 2017 with an after-tax total of $15.5 billion up nearly 11% year over year. Baggage fees added $4.6 billion to 2017 profits.
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The 23 U.S. airlines with scheduled passenger service reported after-tax net income of $15.5 billion in 2017, up 10.7% from $14.4 billion in 2016. That marks the fifth consecutive year that the U.S. carriers have posted a net profit based on net income reports to the U.S. Bureau of Transportation Statistics (BTS).
Checked baggage fees totaled a record $4.6 billion last year up a whopping 45.4% compared with $3.15 billion in 2016 baggage fees. Reservation change fees rang up $2.6 billion revenues.
Pre-tax operating profits last year totaled $21.4 billion down about 18.7% from $25.4 billion in 2016 but still the ninth consecutive year the airlines have posted a pre-tax profit
Operating revenue for the 23 airlines totaled $175.3 billion of which $130.5 billion was received in ticket sales. Operating expenses totaled $153.9 billion which includes $26.2 billion in fuel costs and $53.6 billion in labor costs.
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Domestic operations contributed$17.9 billion in pre-tax operating profit last year, down from $19.9 billion in 2016. International operations (for 18 airlines) posted pre-tax operating profit of $3.6 billion down from $5.5 billion in 2016. Of the $4.6 billion in total baggage fees, $3.6 billion was paid by domestic passengers.
The 23 U.S. scheduled passenger airlines reported a combined net income margin of 8.8% in 2017, up from a net margin of 8.3% in 2016. These airlines reported an operating profit margin of 12.2% in 2017, down from 15% in 2016.
BTS noted that baggage fees and reservation change fees are the only ancillary fees that are reported separately. Other fees, including preferred seating assignments, on-board sales of food, beverages, pillows, blankets, and entertainment, are combined in other categories and cannot be identified separately.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
