The main culprit behind the steadily climbing airfares is not the fact that the airlines are trying to recoup the billions they’ve lost the last decade. Rising airfares have been directly linked to the increasing costs of fuel (most airlines stopped hedging fuel costs a number of years ago). However, don’t expect airfares to suddenly drop and match the latest descent in fuel prices (as much as 20% in parts of the United States). Profits have been driven by lower fuel costs, revamped route structures that allow airlines to push their seats to markets that need them most, and finally, the millions each airline is making in ancillary fees (luggage fees, early boarding, etc.).
Airline industry on profitable path
By Charisse Jones for USA Today
A more disciplined airline industry, buoyed by lower fuel prices and a stronger economy, scored another profitable quarter, results that bode well for the rest of the year and possibly into 2014, travel analysts say.
Southwest and United were the latest U.S. carriers to report a profit for the period running July through September. Low-cost carrier Southwest said Thursday that it saw a profit of $259 million, or 37 cents a share, up from $16 million during that period in 2012. United posted a profit of $379 million or 98 cents a share, during the third quarter.But United's gains fell below analyst expectations.
Overall, U.S. carriers saw their bottom lines bolstered by a combination of factors, including their careful calculations about how many seats to fly, and where the flights should be headed. That has enabled them to boost fares.