The following is an excerpt from Brad Tuttle | January 21, 2016 | Time.com |
Record-high revenues, profits in 2015.
To some extent, travelers should be happy. Early 2016 has ushered in a series of impressive airfare sales—think: one-way domestic flights under $50—to go along with a downward trend for flight prices in general. According to data from Hopper.com, the average round trip in the U.S. runs $210 for January 2016, a three-year low, and down 14% compared to the same month a year ago.
Yet when travelers catch wind of how much the airlines have been saving on fuel lately, they have good reason to be upset—because their savings on airfare is a pittance compared to the profits airlines are reaping thanks to phenomenally cheap fuel costs.
This week, Delta reported a $980 million profit for the fourth quarter of 2015, as well as $4.5 billion in profits for the year as a whole. The year represented “a record for Delta on all fronts,” Delta CEO Richard Anderson said in a statement.
The profits came largely on the back of low fuel prices. During the fourth quarter, Delta’s operating revenues actually decreased 2%. Yet fuel costs were so low that the carrier took in record profits anyway. The profits-via-cheap-fuel equation is likely to work in Delta’s favor even more in 2016, as the airline anticipates fuel-related savings of up to $3 billion this year.
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