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Airlines Return To Profitability

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Airlines Return To Profitability

Business

Airlines Return To Profitability

Airlines Return To Profitability

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A sign lists the costs for checking baggage with American Airlines. i

A sign lists the costs for checking baggage with American Airlines last month at Seattle-Tacoma International Airport. Ted S. Warren/AP hide caption

toggle caption Ted S. Warren/AP
A sign lists the costs for checking baggage with American Airlines.

A sign lists the costs for checking baggage with American Airlines last month at Seattle-Tacoma International Airport.

Ted S. Warren/AP

The U.S. airline industry is rebounding. For the sixth consecutive month, carriers brought in more money than they did last year.

"We are seeing some light at the end of the tunnel," says Dave Castelveter of the Air Transport Association, an industry trade group. "You know we have been faced with challenges like none other."

The industry was clobbered after the Sept. 11, 2001, attacks. Then the global economy soured, and people stopped traveling. Fuel prices climbed to record levels.

In response, the airlines had to cut costs. They reduced the number of flights and slashed their payrolls. They began adding fees for things like food and luggage. Some airlines, like Delta and Northwest, even merged.

Passengers are now paying about 20 percent more for airplane tickets than they paid a year ago. And the number of passengers -– especially business travelers — who often pay higher fares is increasing.

Industry analyst Richard Aboulafia of the Teal Group says that with the demand for tickets quite strong, the airlines are in the driver's seat.

"The one thing you want … when numbers come roaring back as they are now is that seats are at a premium because you've cut so many of them," he says, "and therefore you have more pricing power and your profits go up."

This week, Delta Air Lines reported its largest quarterly profit in more than a decade. United and US Airways posted their first profits since 2007.

Some airlines are now beginning to order new planes and rehire workers. But, Aboulafia says, airlines will be very careful not to add too many new flights too quickly.

"They're going to be pretty reluctant to add a whole lot of capacity," he says. "That means that things are only going to get a little tighter for the consumer, a little more expensive."

So travelers may have to book early and shop more carefully.

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