BTS Releases 3rd-Quarter 2010 Airline Financial Data;
Network and Low-Cost Airlines Report Profits
For data tables, see BTS Airline Financials Release
Network airlines' profit margin in the third quarter of 2010 was the highest since the U.S. Department of Transportation's Bureau of Transportation Statistics (BTS) began issuing quarterly airline financial numbers in 2002 while the low-cost carriers' profit margin was the second highest, BTS reported yesterday in a release of preliminary data.
BTS, a part of the Research and Innovative Technology Administration, reported that the network airlines reported an operating profit margin of 10.5 percent as a group in the July-to-September period, their second profit since the third quarter of 2009 (Table 1). The low-cost group's profit margin of 11.0 percent was surpassed only by an 11.2 percent profit margin in the second quarter of 2006. The low-cost group last reported a loss margin in the third quarter of 2008. See Airline Financial Data Press Releases for historic data.
Regional airline data are not included in this quarter's press release because of incomplete data.
As part of their third-quarter revenue, the airlines collected $906 million in baggage fees (Table 1A) and $590 million from reservation change fees (Table 1B) from July to September.
In addition to baggage and reservation change fees, airlines reported ancillary revenue of $646 million from passengers and from other sources. This revenue category includes revenue from frequent flyer award program mileage sales and pet transportation fees (Table 1C). Total third quarter 2010 airline revenue from all ancillary sources that can be identified, including fees and frequent flyer sales was $2.1 billion, with Delta Air Lines reporting the most, $693 million (Table 1D).
Baggage fees and reservation change fees are the only ancillary fees paid by passengers that are reported to BTS as separate items. Other fees, such as revenue from seating assignments and on-board sales of food, drink, pillows, blankets, and entertainment are reported in a different category with other items and cannot be identified separately.
The combined baggage and reservation change fees from passengers combined with ancillary revenue from other sources constituted 5.8 percent of the total revenue of the 26 carriers that reported receiving ancillary revenue (Table 1E). Spirit Airlines reported the largest percent of operating revenue from ancillary revenue of any carrier, 26.9 percent. For additional Miscellaneous Operating Revenue data, go to BTS Schedule P-12 .
Operating Margins
The six network carriers posted a profit margin of 10.5 percent in the third quarter with a combined operating profit of $3.0 billion (Table 2). In the third quarter of 2009, the network carriers reported a profit margin of 1.4 percent with a profit of $338 million.
The seven low-cost carriers reported an 11.0 percent profit margin, with profits of $635 million for the eighth consecutive profitable quarter.
Operating margin measures profit or loss as a percentage of the airline's total operating revenue. The top three operating profit margins were reported by network carriers Alaska Airlines and Delta and low-cost carrier JetBlue Airways (Tables 2, 3). All network and low-cost carriers reported positive profit margins in the third quarter (Table 2, 3).
Network carriers operate a significant portion of their flights using at least one hub where connections are made for flights on a spoke system. Low-cost carriers are those that the industry recognizes as operating under a low-cost business model, with lower infrastructure and aircraft operating costs. Regional carriers provide service from small cities, using primarily regional jets to support the network carriers' hub and spoke systems. The selected groups consist of those airlines in each group with the highest reported operating revenue in the most recent 12-month period.
Fuel Expenses
The six network airlines spent 25.0 percent of their operating expenses in the third quarter of 2010 on fuel, compared to 24.5 percent in the third quarter of 2005 (Table 5).
The network carriers spent 3.54 cents per available seat-mile (ASM) for fuel in the third quarter of 2010, up from 3.13 cents per ASM in the third quarter of 2005 and up from 3.24 cents per ASM in the third quarter of 2009 (Table 6).
Low-cost carrier Allegiant Air spent the most for fuel per ASM and low-cost carrier Frontier Airlines spent the least (Table 7).
For airline fuel expenses, see Tables 5-8. For additional detail on airline fuel cost and consumption, see the BTS Airline Fuel Cost and Consumption web page.
Unit Costs
Unit costs for the network carriers increased from 13.7 cents per ASM in the third quarter of 2009 to 14.2 cents per ASM in the third quarter of 2010 (Table 9).
The carriers with the highest unit costs were network airlines US Airways and United Airlines. The lowest unit costs were reported by low-cost carriers Spirit and Allegiant (Tables 10-11).
Unit Revenues
The six network carriers' unit revenues in the third quarter of 2010 were 15.8
cents per ASM compared to 13.9 cents in the third quarter of 2009 (Table 13).
The highest unit revenues were reported by network carriers US Airways and United. The lowest unit revenues were reported by low-cost carriers Spirit and Allegiant (Tables 14-15).
Passenger Yield
The six network airlines' passenger yield was 13.0 cents per revenue passenger-mile (RPM) in the third quarter of 2010, up from 11.2 cents per RPM in the third quarter of 2009 (Table 17). Passenger revenue yield measures passenger revenues against total travel by dividing passenger revenues by RPMs.
The top passenger revenue yields were reported by low-cost carrier Southwest and network airlines American Airlines and United. The lowest passenger revenue yields were reported by low-cost carriers Spirit and Allegiant (Tables 18-19).
Reporting Notes
This release consists of domestic and international, or system, financial reports for the airlines. For additional revenue and operating profit/loss numbers, go to the BTS home page and use the links in the Airline Industry box.
Airline financial data from the third quarter of 2010 and previous quarters are posted on the BTS website at TranStats, the Intermodal Transportation Database, http://www.transtats.bts.gov/Fields.asp?Table_ID=295 . Data are compiled from quarterly financial and monthly traffic reports filed with BTS by commercial air carriers.
Financial and traffic data are preliminary and include data received by BTS as of Dec. 15. Revised carrier data and late data filings will be made available monthly on TranStats on the Monday following the second Tuesday of the month. Data are subject to revision. BTS will release fourth quarter 2010 financial data on May 9.
For data tables, see BTS Airline Financials Release