Airlines say they earn 21 cents per passenger

Airline profit down to 21 cents per passenger on higher fuel costs, trade group says

Associated Press

DALLAS (AP) -- U.S. airlines earned just 21 cents on each passenger they carried last year as profits were sapped by high jet fuel costs, according to an industry trade group.

That profit was down from 77 cents per passenger in 2011 and $3.18 in 2010, Washington-based Airlines for America said Thursday.

Meanwhile the airlines' fuel tab crept up to $3.06 per gallon last year from $3.00 in 2011 and $2.17 from 2006 through 2010.

The trade group based its figures on information from the 10 biggest airlines that have reported 2012 financial results.

The airline industry is trying to combat the perception that carriers are constantly raising fares and fees, and that mergers — last week American Airlines and US Airways announced plans to merge — will lead to more price increases. The campaign comes as the airlines gear up to ask Congress for tax and regulatory relief.

U.S. airlines lost billions in 2007 and 2008, as they were hit first by skyrocketing fuel costs and then a recession that led to a drop in travel. Most major U.S. airlines made money last year, and the top 10 earned a combined $152 million. The exceptions were American, which was in bankruptcy protection, and United, which suffered from technical problems that drove passengers away.

Airlines have been able to raise fares and fees in the last few years partly by controlling the supply of seats, which has led to fewer empty seats and less need to run deeply discounted fare sales.

Airlines for America said the fare increases were modest. It said that the cost of air travel — including fees for checking luggage and other services — has risen just 20 percent since 2000, less than the rate of inflation.

Consumer advocates worry that prices will rise as mergers leave fewer airlines controlling more of the market, but the trade group's chief economist, John Heimlich, disputed that.

"There is no credible evidence that (merger-and-acquisition) activity has led to increases in fares," Heimlich told reporters on a conference call.

Airlines for America said the 10 big airlines earned $152 million in 2012 despite a jump in fuel costs to $50.4 billion from $38.8 billion just two years earlier. Fuel usually accounts for about a third of an airline's costs.

The 10 airlines in the trade group's numbers are United, Delta, American, Southwest, US Airways, JetBlue Airways, Alaska Airlines, Hawaiian Airlines, Spirit Airlines and Allegiant Air.

Officials from the group say they are working with members of Congress to introduce legislation that would roll back some aviation taxes, most likely a fuel excise tax dating to the early 1990s, and reduce the amount of financial records they must report to the government.

The bill might also include repealing recent Department of Transportation rules that require airline ads to state the full cost of an airline ticket, including taxes and fees, the officials said.

Meanwhile, the group's executives said they were not concerned that automatic federal spending cuts that are possible on March 1 would affect air travel. The automatic cuts could take effect if Congress and President Barack Obama are unable to agree on future federal spending.

The group's senior vice president for safety and operations, Dan Elwell, said he expects Congress and the White House to insulate the air transportation system from any effects of automatic spending cuts.

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