Wednesday, Dec. 07, 2011

Airlines Can't Make Money

Flying in 2011 looked something like this: You take off your shoes, you get seriously frisked, you pay a baggage fee, you pay a second baggage fee, you squeeze onto a crowded plane, and you get delayed. All that, and somehow we're paying more for this fun little adventure than we were last year. And it hasn't been a picnic for the airlines either. In the first nine months of 2011, airline revenue rose 12.7%. But expenses for those airlines increased 16.1%, thanks to a spike in jet-fuel prices and rising labor costs. Plus, there's less competition between carriers after recent mergers. So even as flying seems to get more inconvenient in just about every sense (including planes flying at record capacity), airlines still can't seem to make a healthy profit. An index of 15 major airline stocks has fallen by about a quarter this year, even as ticket prices continue to rise. Six of the country's largest airlines raised fares nine times this year. And there appears to be no end in sight.