Riding the favorable winds of increasing passenger traffic, slightly better fuel prices and revenues from ancillary services such as baggage fees, the world’s airlines should post record absolute profits in 2014, according to the International Air Transport Association (IATA). But some parts of the air transport system, particularly cargo and business-class passengers, remain at pre-recession levels.
World airlines collected $27 billion in revenue from products and services other than ticket sales last year, according to the latest annual report by research company IdeaWorks. The total came from data from 53 airlines that disclose ancillary revenue activity.
The proposed merger of American Airlines and US Airways will no doubt undergo close scrutiny by antitrust regulators and face particularly vigorous opposition from consumer advocacy groups. Even supporters concede that the effort toward creating the largest airline in the world will face obstacles.
Despite $1 billion in losses during the first half of this year stemming from fuel and other cost increases, major U.S. airlines have improved operational performance on several fronts, according to the trade group Airlines for America (A4A).
Ancillary revenue collected by airlines for products and services ranging from checked bags and extra legroom to co-branded credit cards continues to grow in size and importance to the industry. Fifty world airlines that disclose proceeds from such activities reported $22 billion in ancillary revenue last year, marking a 66-percent increase over 2009 results, according to a new report.