US Airlines benefit from fees and fare increases

Dallas: Three US airlines, American, Delta, and Northwest Airlines are doing well on account of higher fares and new fees, and expect revenue per passenger per mile to go up by around 10 per cent this quarter.

Per unit revenue at AMR Corp.'s American Airline will increase upto 11 per cent for its operations. Delta has said its gain would be around 10 per cent, including regional carriers. Northwest Airlines estimates an 11 per cent gain for its US routes.

These reports have added strength to analysts' opinions of an improving industry outlook on fees, higher ticket prices, and the retreat of oil prices from record highs.  Analysts say that the airlines' forecasts are on the higher side of expectations, and could raise the possibility of a break-even by the fourth quarter. 

Jet fuel surged 43 per cent last year, prompting capacity reductions at US airlines that are starting to kick in now. Additionally, carriers are also eliminating their lowest fares to stem further losses. 

American, Delta, and Northwest rank first, third, and sixth in the United States by traffic, respectively.

Analysts say that the 10 per cent capacity reduction that is coming up now, which is both large and unprecedented, double-digit growth could be reasonably expected in the unit revenue for the industry. 

American predicts its third-quarter unit-revenue gain to be in the range of 10 to 11 per cent. 

Northwest has similarly estimated its increase in the range of 9 to 11 per cent.

United Airlines has said that it expects to post an additional $700 million in revenues that is accruing from charges for second items of checked baggage, and from a program which lets frequent fliers earn miles faster by paying a fee.

Earlier in the week, United doubled its fee for a second checked bag to $50, from the $25 it charged previously.

One of United's loyalty programmes allows travelers to pay extra to earn double or triple award miles on a flight. The programme, according to a statement by a company spokesperson, will bring in an additional $1.5 million in revenues in its first month, after sales to about 20,000 people. UAL says that the programme by itself could be worth tens of millions of dollars annually.