The airlines are happy- why aren’t you?
Air carriers are making money as complaints climb
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Airline CEOs are smiling. They are making headlines. American Airlines, “reports record revenue.” United Airlines, “shrugs off recession fears as workers ‘untethered from the desk’ fuel travel demand.” Despite all those problems with summer travel, the airlines are making money.
It’s partly because you want to fly. “Demand is strong. And we're really pleased because that's powering the results that we’re reporting, and also the forecasts that we're giving as well,” American Airlines CEP Robert Isom told CBNC as he predicted profits for the current 4th quarter.
“We want to be reliable and we want to be profitable. And I'll tell you what, it's taken us a little bit longer than I'd like to get back to reliability, but we're on that track,” the CEO proclaimed.
American Airlines CEO Robert Isom talks about what drove profits in the summer. (Credit: CNBC)
United Airlines’ boss Scott Kirby is bullish too despite what he says are some serious headwinds including fears of a global recession. “Our operation is firing on all cylinders,” he told analysts during the company’s earnings call.
All these profit reports come as the industry is still operating at a level about 10% lower than before the pandemic. Business travel hasn’t returned to pre-pandemic levels. There is still a shortage of pilots. Boeing and Airbus are having supply-chain issues and are slow delivering new jetliners.
But Kirby says something has fundamentally changed. It’s leisure travel. The United CEO calls it a, “permanent structural change.” He believes that since workers now have the flexibility of remote or hybrid work, “every weekend can be a holiday weekend.” This new work environment, “untethered them from the office and gives them the newfound flexibility to travel far more often than before,” he said, adding, “This is not pent-up demand. It's the new norm.”
United Airlines CEO Scott Kirby explains his theory about how leisure travel has changed. (Credit: United Airlines)
Kirby says his theory explains why United had a good September, which is usually an off-peak month for travel. Kirby believes the trend will continue and he is optimistic about next year and beyond.
So the airlines are happy. Why aren’t you? Just days after the glowing earnings reports were released, the government released its latest report on consumer complaints about the airlines. Many of you may be part of Scott Kirby’s theory of the new leisure traveler but that doesn’t mean you got to your destination on time.
In August, there were 7,243 complaints about the airlines. That’s a 6% jump from July. Overall, complaints are up 320% from pre-pandemic levels. The majority of these complaints, 56%, involved domestic carriers. About one-third of the complaints dealt with flight delays or cancellations. The two airlines with the most cancellations are the two mentioned above. United canceled 3.6% of its flights. American was right behind with 3.5% of its takeoffs canceled in August.
(Credit: Getty Images)
Just less than a quarter of the reports to the government were complaints about baggage handling, and 20% of those who contacted the Department of Transportation were complaining about a refund from an airline. DOT, in reporting this monthly complaint report, once again highlighted its dashboard to help flyers figure out what they are owed for troubled flights.
I found this juxtaposition a bit strange. Demand is high. We want to fly. But more and more of us really aren’t happy with the experience. All while the airlines return to profitability. Welcome to the friendly skies.
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(Cover image credit: Getty Images)