Airlines Reap Record Profits, and Passengers Get Peanuts
By JAD MOUAWADFEB. 6, 2016  


Helped by falling oil prices, airlines are reporting record profits, but for many passengers this sudden bonanza has meant little more than extra bags of free peanuts and pretzels.

The four biggest domestic carriers — American Airlines, Southwest Airlines, Delta Air Lines and United Airlines — together earned about $22 billion in profits last year, a stunning turnaround after a decade of losses, bankruptcies and cutbacks. A big reason for this is the plunging price of jet fuel, which now costs only a third of what it did just two years ago.

But that windfall is only slowly finding its way down the aisles. Days after reporting record profits, for instance, two of the nation’s biggest airlines brought back free snacks in coach.

United said it would begin serving complimentary stroopwafels, which it described as “Dutch-made toasted waffle treats,” and American said it would offer free meals in economy class on flights between Dallas and Hawaii, and free snacks on all domestic flights.

Airfares, however, have remained stubbornly high.

Rick Seaney, co-founder of FareCompare.com, says airfares have been essentially stable for the last two years except on some routes where airlines have faced competition from low-cost carriers like Spirit Airlines.

Analysts say there is little mystery why. A decade of consolidation has reduced the number of airlines competing in many markets, making it easier for dominant carriers to charge more for flights. At Newark Liberty International Airport, for example — where United, which merged with Continental Airlines in 2010, accounts for 70 percent of flights — airfares are the highest among the nation’s top airports, according to government figures.

At the same time, demand is rising, meaning flights are full and airlines have few incentives to discount fares.

“This is like a perfect storm for the airlines right now, and it could keep going on for the next year,” Mr. Seaney said. “Giving free peanuts and chips is a way to address the issue that consumers think the airlines have been nickel-and-diming them.”

http://www.nytimes.com/2016/02/07/business/energy-environment/airlines-reap-record-profits-and-passengers-get-peanuts.html?ref=business