After getting clobbered during the recession, last year things were finally starting to perk up for the airline industry. According to the Air Transport Association, during the third quarter of 2010, a $506 ticket was pulling in a $33 profit. That might not seem like much, but it easily outstrips the scant profits the industry made over its last dismal decade.
That fledgling recovery has already hit a roadblock though. Thanks in part to instability in the Middle East, jet fuel prices are on the rise -- up about 50% from this time last year. Because of the rising fuel bill, that same $506 ticket would make a fraction of the profit today that it did last year (see chart for details). If the route is longer, the relative fuel costs will be substantially higher, and if you fly coach to a popular destination (that’s competitively priced), the airline might actually be losing money on the ticket.
The bottom line? Look for ticket price increases and watch out for the extra charges that make up the difference. Hello, baggage fees…
The journey begins at the Los Angeles International Airport on a Delta Boeing 757-200, and ends in New York’s LaGuardia on an Airbus A319.
Shown above is the approximate cost of that flight to the airline, calculated by MCR Federal’s Joakim Karlsson. Karlsson generated estimates using Federal Aviation Administration-reported taxi and flight times and industry averages for boarding times. The costs reflect standard prices for crew labor, fuel and maintenance.
In all, the total price-tag for the airline comes to $17,752. Not cheap. Flying the plane, though, is only about half the cost of actually running an airline, Karlsson says. (See interactive graphic for full breakdown of costs.)
