This year is shaping up to be the most profitable year for the airline industry in at least a decade. Operating profits for airlines in the United States exceeded $7.1 billion in the first nine months of 2010, according to the most recent data from the U.S. Department of Transportation.
That figure surpasses the industry's full-year profits going back to at least 1999, when airlines posted income of $6.8 billion over 12 months.
This is great news for the US economy as a whole. The Air Traffic Association, in its recently released 2010 Economic Report, summarizes the important role that commercial aviation plays in practically every aspect of our economy and daily lives. Every single day in the United States, two million people, 50,000 tons of cargo and more than one million bags travel onboard 25,000 U.S. airline flights to destinations in this country and beyond. Commercial aviation supports nearly 11 million U.S. jobs and contributes $731.5 billion to U.S.gross domestic product.
“As we all work toward a stronger economic future, it is a particularly opportune time to focus on the contributions that commercial aviation makes toward revitalizing the U.S. job market and creating a brighter future through economic development,” said ATA President and CEO James C. May. “It is more important than ever for both the airline industry and those in government to make the right choices to foster prudent investment in commercial aviation.”
The Airline Industry's 2010 surge in profits is in stark contrast to 2008, when the industry lost more than $5.5 billion due to a recession that sent demand plummeting and fuel prices that spiked when oil went to $147 per barrel.
At that time, Carriers responded by slashing the number of flights they offered, deleting service to cities with the fewest passengers. This allowed the Airlines to park planes that were underutilized and reduce the number of seats available. They then filled the remaining airplanes full of the remaining passengers and once again began to make money. As the profits return, so will expansion and the demand for more aircraft and pilots to fly them.
"They were preparing for the worst," said Robert Pickels, airline industry expert and senior equity analyst for Manning & Napier. "If you're staring into the abyss like that, it really changes your behavior."
