“U.S. airlines workers, who have gone through pay and benefit cuts, layoffs, bankruptcies and rising workloads in recent years, are looking to capitalize on the return to profits this year of most big U.S. carriers.” That’s the lede today in a story from USA Today.

The bottom line is the airline employees have been ignored for too long. Now that the airlines are showing a profit, employees may well start to demand their due.

The Wall Street Journal and the Dallas Morning News jump in with airline labor stories too.

“The nine largest US passenger airlines posted cumulative net income of $1.45 billion for the three months ended June 30, turned around from a net loss of $556 million in the year-ago period…” That’s according to Air Transport World.

Airline news has, indeed, been rosy of late. But most of the business press gets only half the story. Here’s what’s not being widely reported:

Airline labor is extremely unhappy. Pay cuts. Benefits cuts. Staff cuts. All the cutting has undoubtedly helped the bottom line, but it’s been at the expense of employees. Some predict that labor will get its revenge through strikes.

At best, the economic recovery is uncertain. This means uncertainty for the airlines (yes, that a “duh” point, but no one seems to get it).

The airlines continue to heap abuse on their customers. The brewing backlash could clobber the airlines where it hurts most: the bottom line. As aviation consultant Michael Boyd recently wrote:

It’s not that airlines don’t have the right to charge for what they deliver. They do, regardless of phony tantrums thrown by Senator Schumer who’s jealous that he can’t tax a lot of the new fees - yet. But it’s how airlines do it that could send the Pope to a Valium bottle. There are the incredibly dumb rules [inflicted] on both passengers and line employees (assuming they have any). Any little change to an itinerary - even just a two hour flight change - can mean hundreds of dollars in penalties. ‘Cept these charges aren’t called penalties. They’re dubbed as “service fees” - which is like describing jail time as a short term vacation. Any variation, and the consumer can get nailed. A particularly opportunistic one is the fee for getting on an earlier flight - when the customer is at the airport already and the earlier flight is nearly empty. The whole process is beginning to be perceived as if the ticket is just the down payment - if you don’t want to be uncomfortable, you’ll have to pay more…Unless things change, and soon….One word, Benjamin: Re-regulation. Bank on it, consumers are starting to revolt, and may rush into the open cloak of Washington charlatans like Schumer. Then everybody loses…

“Every month last year, major U.S. airlines saw a year-over-year decline in average fare. So far this year, the opposite has held true. Couple that with a growing appetite for ancillary revenues—from baggage fees and change fees to lounge passes and whatever the revenue management department’s fancy—and domestic airlines are in a better position to generate revenue than they’ve been in quite some time.”

Read the rest of the story from Business Travel News.

The airlines are definitely feeling the impact of the new federal rules concerning tarmac delays:

“Elaborate action plans, high-tech bells and whistles and stockpiles of emergency snack kits that carriers created to comply with a new three-hour tarmac rule have been tested by storms that buffeted the Chicago area this month. The new federal regulation mandates that airlines give passengers the option to get off planes that have sat on the airfield for three hours. More than 500 flights were canceled at O’Hare on June 23, despite the addition almost two years ago of what the Daley administration heralded as a “bad weather runway” on the north airfield to mitigate disruptions to travelers. A downpour on June 18, accompanied by 70 mph winds, left O’Hare’s flight schedule in tatters: 221 flights were canceled and 328 departed more than 44 minutes late, according to FlightStats.com.”

Read the rest of the story from the Chicago Tribune.

In May U.S. airlines reported passenger revenue, “rose 21 percent in May 2010 versus the same month in 2009, marking the fifth consecutive month of revenue growth.” That’s according to the Air Transport Association (ATA).

The ATA also reports, “the average price to fly one mile rose 17 percent.”

Our passenger numbers are in for May and they show that we were down four percent for the month and four percent year-to-date. Here’s how the numbers breakdown, showing a month to month comparison:

• May 2009: 81,496 total passengers
• May 2110: 67,609 total passengers

(Click here to see the complete statistical summary. Be sure to check out the tabs at the bottom of the page)

Take a look at how the individual airlines did during May 2010, compared to May 2009:

• Delta: - 27%
• United: - 17%
• Allegiant: -10%
• American: -15%

On the surface these negative numbers seem lousy—especially when compared to last May when the airport’s total passenger numbers were up 17 percent. The numbers seem lousy, but they really aren’t. That’s because this year the airlines are making money. Last year they were losing money. In the jargon of the business, “yields” have improved.

Here’s how yields work…

Suppose you’re an airline with a jet that holds 50 people. Would you rather sell 50 seats at $100 a piece, or 30 seats for $200 a piece? You do the math:

• 50 seats sold for $100 = $5000
• 30 seats sold for $200 = $6000

The dollar amounts used here are hypothetical, but this illustrates exactly what’s going on in Springfield right now: the airlines are selling fewer seats this year, but they’re selling them at a higher price.

Let’s look at the big picture and gain some perspective…

Last year, early in the first quarter, the airlines took a look at their advance bookings and nearly stroked out—advance bookings were terrible. In response, airlines cut fares across the country. At this airport, in 2009, fares were down an astounding 22.3%. Bottom line: more people were flying due to fare cuts, but the airlines were losing money hand-over-fist. It was good for customers, but bad for airlines.

This year, early in the first quarter, something unexpected happened: business travel ticked up. As an American Airlines route planner told me last week, “It was like someone turned on a faucet and the business traveler was suddenly back.”

The return of the business traveler, after the depths of the recession, gave the airlines the leverage they needed to start raising fares.

Here’s the bullet point summary of where the airlines are right now:

• Fares are up
• Airlines continue to cut the number of seats in the air, thus further reducing operational costs
• Fuel prices are down (compared to last year)
• Airlines are giddy because they’re making money…

Here’s the take-away from all this: airports tend to get giddy when passenger numbers are up because it means more airport revenue. That’s what happened last year at our airport. The downside was that the airlines were losing money. Now, the tables are turned: the airlines are making more money and the airport is making less money. In the final analysis, airports would rather have happy airlines. An airline that’s losing money is a lot more inclined to pull up its stakes and leave the market.

Having said all that, be warned! We’ll see wild swings this year. The month of June has 59 more flights than May; all of them seasonal. This will probably cause passenger numbers to swing to the positive side. But this fall, when those seasonal flights go away, numbers will swing back the other way. It’s true for the entire industry—just two months ago the International Air Transport Association (IATA) predicted a  $2.8 billion global loss for airlines this year. Last week the IATA changed its mind and predicted a $2.5 billion gain.

Don’t be surprised if the entire industry swings back and forth for the duration of the recession.

The Detroit News reports that some airlines will waive bag fees if you use an airline credit card. There is, of course, a catch: the credit cards have annual fees.

This news comes on the heels of a survey which found, among other things, that “given the opportunity, 68% of respondents said they would fly at an inconvenient time of day with an additional connection in order to avoid fees; 32% said they would bite the bullet and pay the extra money to fly at a convenient time.  62% also said they would forego a carry-on bag in order to avoid a fee.”

All these fees probably won’t go away any time soon. They generate too much income. By some estimates  fees generated over $7 billion last year.

And here’s an airline revenue stream you may not have thought about: shopping catalogs. You know, those catalogs in the airplane seat pockets. Last week I flew to San Diego and had a chance to browse one.  This particular catalog featured one of those spiffy upside down garden things for $89.95.  Earlier in the week I saw one at a Springfield Wal-Mart for $15.00

The Federal Department of Transportation (DOT) has proposed new airline rules designed to protect consumers. Here’s the list of rules, as outlined in the DOT media release:

• increase compensation for passengers involuntarily bumped from flights
• allow passengers to make and cancel reservations within 24 hours without penalty
• require full and prominently displayed disclosure of baggage fees as well as refunds and expense reimbursement when bags are not delivered on time
• require fair price advertising
• prohibit price increases after a ticket is purchased
• mandate timely notice of flight status changes

Read this scathing indictment of airline customer service (and about the need for the new rules) from aviation analyst Michael Boyd. Usually he has nothing good to say about the DOT. This time he’s making an exception.

Word comes this morning that five Airlines have promised they won’t charge customers for carry-on bags. That’s according to U.S. Senator Charles Schumer.

Schumer took the entire airline industry to task last week after Spirit Airlines announced a plan to charge $45 per carry-on.  The senator threatened to unleash the U.S. Treasury Department on airlines, using the unique argument that charging bag fees is tax evasion. Apparently some airlines don’t like the sound of that!

Read more from Reuters, via the New York Times.

U.S. Senator Charles Schumer, Democrat of New York, announced on Sunday that he’s taking aim at carry-on fees. Last Tuesday Spirit announced it will start charging $45 for carry-on bags, effective in August. Schumer wants the government to forbid airlines from charging carry-on fees.

Schumer’s approach is unique. According to the Associated Press, he doesn’t want the U.S. Department of Transportation to tackle the issue through rule making––he wants the Treasury Department to do it.

The Associated Press paraphrases Schumer as saying, ‘Carry-on fees artificially avoid higher ticket prices and the taxes applied to tickets.’ In essence, Schumer is accusing airlines of tax evasion.

Oh, brother…

While most of us in the airport industry certainly agree with the idea that the airlines are really pushing this bag fee thing too far, to accuse them of tax evasion is over the top. The airlines aren’t exactly making money hand-over-fist. In their defense, they’re simply looking for a way to make up the difference. What would the senator think if the airlines just added $45 to every fare? Would he be fine with that?

?????

Beware of politicians trying to dictate travel policy.