The airline industry is enjoying the best of times, at least for the American-based operators. The price of their main input costs are all flat or falling.
Plunging commodity prices make the cost of their main piece of equipment, jets, decline. Labor costs are being held in check with inflation muted.
And most importantly, the price of jet fuel has absolutely collapsed. As recently as last fall, jet fuel cost more than $3 per gallon. It gets barely half that today, recently quoting around $1.55 per gallon.
This is a huge savings – the type that is hard to overstate. For a typical airline in operation, jet fuel accounts for 30% of their overall cost structure. Or at least 30% at last year’s prices. You’re looking at 15% of the average airline’s expense line of the budget disappearing overnight. A real bonanza!
The airline industry has enjoyed near-record profitability. From an income sheet perspective, airlines are simply rolling in dough.