As of today: US security fees will increase air fares, lower airline stocks
It has been a very profitable year for airline shareholders. The stocks of legacy carriers such as American, Delta and United Continental have risen at least three times higher than the S&P 500.
It has been a very profitable year for airline shareholders. The stocks of legacy carriers such as American, Delta and United Continental have risen at least three times higher than the S&P 500. Shares of low-cost carriers such as Southwest and Spirit have gained almost 50 percent since January.
As of today higher fees will be tacked on to US airfares that have been climbing. But airline shareholders should be wary; the higher fees could bring turbulence to what’s otherwise been a smooth flight.
The airline business is tough. Weather delays, volatile jet-fuel prices and impatient passengers all wanting a bargain can play havoc with an airline’s carefully crafted business model. And in the new week, the federal government will slap on higher security fees.
Airlines won’t necessarily see higher profits. The Transportation Security Administration’s security fee goes up from $2.50 per leg of a one-way trip to a flat $5.60. And if you have a layover of more than four hours, you’ll pay another $5.60 even though you haven’t unpacked. We are talking dollars and cents for fliers, but it adds up to millions of dollars in additional fees that the industry must collect.