Airlines report profits as airfares remain high

Nancy Marshall-Genzer Jul 27, 2012
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Airlines report profits as airfares remain high

Nancy Marshall-Genzer Jul 27, 2012
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Stacey Vanek Smith: If you are one of the brave souls traveling this summer you’ve surely noticed that airfares are soaring. And most of the major airlines are reporting healthy profits.  

Nancy Marshall-Genzer has more.


Nancy Marshall-Genzer: Earlier this week, Delta Air Lines and US Airways reported profits above analysts’ expectations. United didn’t do so well, but that’s largely because of complications from its messy merger with Continental. But all the consolidation among airlines means fewer seats are available. Ultra-low fares are a thing of the past. And then there are those extra fees.

Airline analyst Richard Aboulafia says get used to it.

Richard Aboulafia: People have this image – oh they’re charging more and more for a sandwich. There must be a bunch of billionaires in a backroom with monocles and top hats and they’re getting rich at our misery. And it really wasn’t like that at all. It was a story of bankrupt carriers and general economic unpleasantness.

Aboulafia says the surviving airlines can’t charge rock-bottom fares if they want to stay afloat. And he says, even with stable fares, they have to contend with fickle fuel prices. And corporate travelers who are getting more cautious because of the sluggish economy.

In Washington, I’m Nancy Marshall-Genzer for Marketplace.

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