Airline Profits Rose Nearly 11% in 2017, Baggage Fees Up 45%

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.

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.