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June 30, 2010

US airlines eke out US$12 million profit in first quarter

US airlines eke out US$12 million profit in first quarter

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Wednesday, June 30, 2010

U.S airlines as a whole posted a US$12 million profit in the first quarter of 2010 as “ancillary” services propped them up.
Image: Wikimedia Commons.

US airlines in the first quarter of 2010 managed to eke out a US$12 million profit, mostly from “ancillary” services like checked baggage fees, pet transportation fees and more.

Compared to the first quarter of 2009, checked baggage fees soared 33% to $769 million. The airlines also reaped $554 million in reservation change fees, and made $534 million from other ancillary sources; such services (including checked baggage fees, reservation change fees, etc.) made up 21.7% of Spirit Airlines’ income, the highest in the industry.

The US airline industry is made up of 21 carriers, according to the U.S Department of Transportation.

The five “network” or legacy carriers—including United Airlines, Delta Air Lines, Continental Airlines, American Airlines and US Airways—continue to struggle and posted a $163 million loss as a group. Delta Air Lines had the highest profit, at $107 million, while American Airlines was at the other side of the carriers, with a $322 million loss.

Low-cost carriers fared better, posting a $115 million profit as a group, with Southwest Airlines having the largest profit, at $54 million, while Allegiant Air’s profit margins were the highest of the budget carriers at 20%. Regional airlines made a $60 million profit.

The world’s airlines expect a US$2.5 billion profit as a whole, despite an earlier forcast of a loss. However, many investors and groups, such as the International Air Transport Association (IATA), are somewhat doubtful of this number, as oil prices are expected to remain volatile, leading to the possibility of high prices cutting into airlines’ profits.



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April 21, 2010

Ash-triggered flight disruptions cost airlines $1.7 billion

Ash-triggered flight disruptions cost airlines $1.7 billion

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Wednesday, April 21, 2010

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The International Air Transport Association (IATA) said today that the flight disruptions triggered by the recent eruption of a volcano in Iceland cost the global airline industry a total of $1.7 billion dollars.

Cquote1.svg For an industry that lost $9.4bn last year and was forecast to lose a further $2.8bn in 2010, this crisis is devastating Cquote2.svg

—Giovanni Bisignani, CEO of the IATA

According to the IATA, airlines lost a total of $400 million daily for the first three days of the week that European airspace was closed. The closures also impacted an estimated 1.2 million passengers around the world each day, until airspace around Europe began reopening last night. IATA’s chief executive officer, Giovanni Bisignani, said that “[f]or an industry that lost $9.4bn last year and was forecast to lose a further $2.8bn in 2010, this crisis is devastating.” He also claimed that the airline industry would require three years to recover from the effects of the crisis, and called on governments to provide some form of compensation to airlines.

Bisignani also criticized the response of European governments to the ash threat, saying that they had over-reacted and the shutdown of all airspace was excessive. He said that “Airspace was being closed based on theoretical models, not on facts. Test flights by our members showed that the models were wrong. [The crisis] is an extraordinary situation exaggerated by a poor decision-making process by national governments.” Individual airlines also criticized the airspace closures. Micheal O’Leary, CEO of Ryanair, said that “It might have made sense to ground flights for a day or two…But by the time that that cloud has dispersed through 800 or 1,000 nautical miles of air space, a full ban should never have been imposed.”

In defense of the European airspace controller, Eurocontrol, the CEO of the Irish Aviation Authority, Eamonn Brennan, said: “It’s important to realize that we’ve never experienced in Europe something like this before. So it wasn’t just a simple matter of saying: Yes, you could have operated on Saturday or Sunday or Monday. We needed the four days of test flights, the empirical data, to put this together and to understand the levels of ash that engines can absorb.” Additionally, scientists in Switzerland said that studies of ash content in the atmosphere were high enough that the total closure of most European airspace was warranted.

Restrictions over air travel in Europe have been lifted in many parts of the continent today; three-quarters of the scheduled flights were operating, and most of the European airspace having been opened. Only parts of British, French and Irish airspace remain closed, and most of Europe’s major airports are open, although not necessarily operating at full capacity; at London Heathrow Airport, about half the scheduled departing flights were canceled.



Related news

  • “Europe’s airline chaos: in depth” — Wikinews, April 17, 2010
  • “European airspace closed by volcanic ash” — Wikinews, April 15, 2010

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Aftermath of the 2010 Eyjafjallajökull eruption
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February 19, 2005

Airlines fight new EU passenger compensation legislation

Airlines fight new EU passenger compensation legislation

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Saturday, February 19, 2005

Airlines have attacked new EU legislation which will force them to pay greater compensation to customers in the event of overbooking, cancellations and delays.

Consumer groups have praised the new rules, which set the level of compensation between €250 and €600 depending on the circumstances and the length of the flight. “This is some comeback for passengers who have been inconvenienced,” James Fremantle, industry affairs adviser for the Air Transport Users Council, told Reuters. Before this legislation came into effect, passengers “bumped” from a flight could claim between €150 and €300.

The new rules apply to all scheduled and chartered flights. Previously only scheduled flight operators were obliged to offer compensation in cases of overbooking— they did not have to extend compensation to travellers affected by flight cancellations. Low cost airlines have criticised the new compensation levels arguing that the compensation paid will exceed the price of the ticket.

The effort by the EU is to discourage airlines from deliberately overbooking flights, a practice which has become routine for most major airlines. Overbooking often leads to “bumping”, where passengers who cannot be guaranteed a seat are moved to a later flight. In future when this happens airlines will have to offer compensation. Additionally, if flights are cancelled or delayed by more than two hours all passengers must be compensated. This will be the case except in “extraordinary circumstances”, the definition of which may or may not include bad weather, security alerts or strikes.

“It’s a preposterous piece of legislation, we among all airlines are fighting this,” Ryanair deputy chief executive, Michael Cawley told BBC radio 4’s Today programme. It has also been claimed that the advice may mislead customers by having them believe that they may be entitled to compensation if flights are delayed due to bad weather.

Marja Quillinan-Meiland, European Commission spokeswoman has said that there are “grey areas” but added “these are not as big as the airlines are making out.” Disputed cases would be heard by national enforcement bodies which would decide if there is a case to answer.

European Regions Airline Association (ERAA) director of air transport Andy Clarke said “we reckon it’s going to cost European air passengers – not the airlines, the airlines have no money, it has to be paid by the passengers – 1.5bn euros, that’s over £1bn a year loaded onto European passengers. That’s basically a transfer of money from passengers whose journeys are not disrupted to passengers whose journeys are disrupted.”

These extra costs may also lead to carriers cancelling routes to areas that have been identified as problem destinations.

The European Low-Fares Association (ELFA) is mounting a legal challenge to the laws. ELFA and International Air Transport Association expect a ruling from the European Court of Justice in fall of 2005, until then airlines have said they will comply with the regulations.

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