Airfares Near Pre-Recession LevelsPosted: September 5, 2010
Airlines are making money again thanks to the pricing power that has come from an economic recovery and reductions in overall capacity. The improved pricing has allowed airlines to charge for an array of services that were once free. In addition, domestic leisure airfares have increased 20% year-over-year from the second quarter, international fares are up 30%, and business travelers are paying 12% more. Another metric, the price paid per passenger per mile, is only 3.9% off the 15.56 cents from July, 2008 which was the highest for the past 10 years.
All these price increases have translated into seven straight months of revenue growth and major airlines are generating impressive profits. For example, Delta made $467M last quarter; its best quarterly showing in a decade. These results mark a sharp rebound from the decade-low prices at the depths of the recession and from the extremely high oil prices that squeezed airlines before that.
For more details see “After Bargains of Recession, Air Fares Soar” in the New York Times (September 5, 2010).