What’s good news for airlines is bad news for passengers: Passengers are paying more to fly.
Delta Air Lines reported better than expected third quarter earnings, even though it took a $120 million hit to profits from the brutal hurricane season. Even better, as far as Wall Street is concerned, a key measure of how much money passengers spend with the airline climbed 2% in the quarter, even while fares are basically flat.
Delta’s passengers spent more on things like baggage, ticket changes, seat upgrades and extra legroom.
And the airline said it expects passengers to continue to pay even more on average in the final three months of the year.
The report comes the day after American Airlines, the nation’s largest airline, issued an improved forecast for the third quarter despite the fact it took a $75 million hit from the hurricanes. The company said that it expects that passenger revenue to increase between 0.5% to 1.5% in the quarter, about a half-percentage point better than its earlier guidance.
And guidance from United Continental said its passenger revenue fell 3.5% to 4%. But that was an improvement from its earlier guidance which warned it could fall as much as 5%.
Airlines are benefiting by strong passenger demand for seats. Delta filled nearly 87% of its seats with paying passengers in the third quarter, up 1.5 percentage points from a year earlier.
Airline stocks rose Tuesday after the guidance from American and United, but slipped in early trading Wednesday following Delta’s report.