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Airline Profits Soar As Staffing Shrinks & Fees Rise

Locations in this article:  Dallas, TX
Airline Profits Soar As Staffing Shrinks & Fees Rise

Airlines & Airports - Profits Soaring, Reports BTSRevenue from auxiliary fees has U.S. airline profits soaring, but despite the economic upturn the airlines collectively shed 2.3 percent of their workforce over the last year, the U.S. Bureau of Transportation Statistics (BTS) reported on Tuesday.

According to the report, airlines in the United States posted an operational profit of $3.09 billion, most of it driven by auxiliary fees such as baggage charges and reservation changes.

Auxiliary fees alone brought in $2.1 billion in profits for the 21 passenger airlines in three months, said the Bureau of Transportation Statistics.


The BTS reported that the airlines made $893 million in baggage fees, $594 million in reservation changes and $618 million from all other types of fees.

Buoyed by the profits from auxiliary fees, the airlines are now operating at a margin of 9 percent, which is the highest operating margin the BTS has tracked in eight years of data. An airline’s operating margin is its operating revenue divided by its operating profit.

Since 2008 when United Airlines started the auxiliary fee trend, the legacy carriers have gone from bringing in $149.2 million a year in fees to making $719.5 million in fees two years later. The top nine airlines in the nation made 68 percent of their profits in the second quarter from fees, the BTS reported.

Plane on the groundHowever, despite the flow of cash from additional fees, U.S. airlines employed 2.3 percent fewer workers in July of 2010 than in July of 2009.

The airline industry has been losing jobs for 25 straight months, as five of the six top carriers shed jobs over the last year. In July of this year, there were 8,700 fewer workers in U.S. airlines than in 2009.

Though the Federal Aviation Administration controls numbers of in-flight employees like flight attendants and pilots, most airline employees are on the ground and not protected by federal minimums.

Ticket and reservation agents and airline maintenance crews have seen their jobs cut, as airlines push to operate with fewer staff in order to save money. Other airlines have outsourced jobs, especially maintenance jobs, to countries where employees’ wages are lower.

By Adriana Padilla for PeterGreenberg.com.

Related Links: Reuters, MSN.com, Dallas Morning News

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