Business Report 4/29/15: Airline profit - Hawaii News Now - KGMB and KHNL

Business Report 4/29/15: Airline profit

It is time for Crisis at a Glance.

The airlines had great winter quarters because jet fuel was half price. But before fuel prices fell, other things happened that made those profits possible.

The big three airlines all went through bankruptcies to shed some of their pension obligations. In 2000, U.S. airlines spent 33 billion on wages and benefits.

Their collective payroll costs are up less than 2 billion since then.

Which means in real dollars, counting inflation, their labor costs are down a third. Jet fuel costs three times now what it did in 2000.

So fuel prices hurt. Bankruptcy helps. What about merging?

One airline after another said merging and growing would lead to economies of scale, but there is no clear evidence that making the airlines bigger has done anything other than make them harder to manage, so that customer service declines.

It's no accident that airlines with the best customer satisfaction are Hawaiian, Alaska and Southwest, which are smaller and have mostly grown organically rather than through acquisitions.

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