Skift Take
The level of profitability revealed in the latest BTS report is leaves the Big 3 U.S. airlines room to improve their in-flight products and passenger services, without breaking the bank. But they have achieved this profitability in large part by becoming better businesses. If they are to stay profitable when the next inevitable industry downturn comes, they will need to keep improving their retail models.
Cheap oil helped U.S. airlines make unbelievable improvements in net profits last year, but Bureau of Transport Statistics data shows they’ve also become better retailers.
And flyers are benefiting from lower fares.
While total numbers of baggage fees and reservation charges have brought in dollars — $3.8 billion and $3.0 billion, respectively — they represented only 2.26% and 1.78% of airline revenue in 2015. The largest contributor to airline revenue $27.4 billion was transport-related revenue (16.22%).
Though that dropped by 2.64% or $741 million from 2014 to 2015, it was still the largest contributor to revenue than any other category, aside from fares, by a wide margin.
"Transport-Related" revenue stems from flight services like in-flight onboard sales of food, liquor, or other amenities; revenue from code share
