Wondering how your favorite airline carrier is doing as summer will turn to fall in another month or so? Most airlines have low profit margins, and they need to devise effective cost-cutting strategies from time to time to maintain a high level of profitability.
Due to falling fuel costs, airlines in the United States have been enjoying bigger profits over the last year (along with attempting to pay down debts), but some of them are still finding ways to reduce costs.
Here is a look at a few U.S. airlines that are trying to save money now and in the future….
Jet fuel is now the biggest expense for airlines. Different airlines deal with fuel costs in different ways, but not many of them have been as successful in their efforts as Delta Airlines.
Delta spent $150 million to acquire an oil refinery in Delaware in 2012, and it has been using it to supply fuel for its operations in New York and Boston. The refinery has not only helped the airline reduce costs substantially; it has also resulted in a drop in fuel prices throughout the airline industry.
By flooding the marketplace with fuel supply that it would have to otherwise purchase, Delta has helped its competitors save money on fuel.
American Airlines is planning to replace its flight attendants’ paper manuals with lighter Samsung tablets. This move comes about a year after the airline’s cockpits went paperless, and it is one of the strategies that airlines are using to reduce the weights of airplanes and fuel costs. It is expected to lower costs by almost $1 million a year.
Additionally, the use of tablets will simplify in-flight sales of food and beverages, and allow attendants to provide better service for premium customers.
As the following article shows, while some airlines are only focusing on how to create a New Year’s budget that sticks, others are trying to devise long-term cost-cutting strategies.
In November of 2014, United Airlines announced its plans to reduce its annual costs by $2 billion over the next four years.
Some of the measures that the airline will be taking to save money include flying more fuel-efficient airplanes, using new technologies to increase productivity, improving maintenance procedures and others.
United is also planning to increase the revenue it generates from checked baggage fees, in-flight meals and entertainment, and access to airport lounges by about $700 million.
JetBlue is another U.S. airline that has long-term plans for reducing costs. It said in the last year that it will defer the deliveries of 18 Airbus A320 airplanes from 2016-2018 to 2022-2023. By doing so, it is expected to reduce its costs by over $900 million through 2017.
Also, the airline will be increasing the number of seats on its A320 airplanes from 150 to 165 seats, which is estimated to boost its earnings by $100 million by 2019.
The airline industry is a seasonal and cyclical industry, and therefore, the revenues of airlines are somewhat unpredictable.
As such, it is important for U.S. airlines to make constant efforts to keep their costs low, costs that many passengers hope to take advantage of the remainder of this year and into 2016.
About the Author: John McMalcolm is a freelance writer who writes on a wide range of subjects, from social media marketing to finances.