The profit airlines make per passenger will surprise you

It’s widely reported that airlines are raking in more money off checked bags and pricey credit card fees and partnerships than they used to, but the biggest contributor to their revenue is still from the actual passengers who sit in those seats in the sky. But revenue is one thing and profit is another, and we were shocked by how little profit is made off actual passengers.

An analysis of company reports and data from the Bureau of Transportation Statistics shows that between 2021 and 2024, the big four US airlines (Delta, United, American, and Southwest) earned approximately $5.51 in profit per passenger. That’s down sharply from 2016 to 2019, when the companies’ profit per passenger averaged $19.26.

Then, in the first quarter this year, as carriers reeled from tariffs and a decline in travel spending, the figure dropped to under a dollar. Of course, first quarters are also typically airlines’ least profitable, but look at those terrible trend lines!

It’s hard to lump all airlines together, though:

One expert said, “They could theoretically be losing money on some routes that they absolutely have to fly, or they could be making a ton of money because they have no competition there.”

Airlines’ bottom lines can vary dramatically from year to year due to things like terminal construction costs, leases, fuel prices, and labor contracts.

Tariffs have led Delta to yank its guidance even as it scored $2 billion from its American Express card in the first quarter alone, a 13% year-over-year rise.

In any case, declining margins can shed light on why budget carriers have spent recent years un-budgeting themselves, adding premium seating categories, lounges, and, in Southwest’s case, ending some of their most popular cost-saving policies to rake in additional cash from fees. Checked luggage charges totaled $7.27 billion last year among the country’s largest airlines — up more than 26%, or $1.5 billion, from 2019. It’s been a rapid ascent for the revenue category, which Spirit introduced in the US less than 20 years ago, in 2007.

The Takeaway

These newer revenue streams have helped keep ticket prices relatively low for years, but that time may be ending. The shift away from the budget model and larger lack of competition in the industry could soon drive costs for consumers much higher. Since 2007, just two new scheduled passenger airlines have launched in the US. That’s the longest stretch of time in US aviation history with only two new airlines.

The TSA is ending one of its most annoying rules

Rejoice, weary travelers, for there could soon be one less thing for TSA officers to yell at you about. The agency is set to drop the nearly 20-year-old rule requiring passengers to remove their shoes, though there will be specific ID requirements and “selected airports” may still make you expose your stinky socks until it expands nationwide.

Beyond adding to security line congestion, the rule has certainly driven thousands of frequent fliers to programs like TSA PreCheck and Clear. The policy change is bad news for the latter, as travelers will now have less incentive to fork over $209 annually for the private line-skipping service. Clear+ memberships have pushed the company’s revenue to $211.4 million in the first quarter, which has climbed by millions in recent years, as our chart makes plain.

In almost twenty years only two commercial airlines have launched. But it’s crazy to see these margins get compressed so much over the years and yet the flying experience has gotten worse and worse.

A few months ago I did a post about clear as an interesting investment if the Trump Administration ended the TSA.