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Brighter skies haven’t yet helped airlines
Fares are higher, demand is up and the airlines have established a steady revenue stream from add-on fees for baggage, pillows and food.
Fares are higher, demand is up and the airlines have established a steady revenue stream from add-on fees for baggage, pillows and food.
That formula is moving the industry back toward profitability as early as this summer, a change that will have implications for travelers.
But first: more red ink. Starting Tuesday, when Delta Air, Continental, US Airways and the parents of American Airlines and United Airlines begin reporting their results, all are expected to post losses.
One-time costs for February snowstorms and substantially higher fuel prices weighed down results. That follows a combined loss of $3.8 billion for those carriers last year. The results will be better than a year ago, and the quarter ended on a positive note, with most carriers showing improvements in traffic and a key revenue metric.
But when the airlines look forward to the busy summer season, European airports have been closed since Wednesday as ash clouds from an erupting volcano in Iceland spread.
Airline industry group IATA estimated closures have cost airlines $250 million a day.
“The scale of the economic impact is now greater than 9/11 when US airspace was closed for three days,’’ said IATA head Giovanni Bisignani.
