Airline Fuel Bills: More Than Just Peanuts

The industry's remaining expenses break down this way:

• Salaries and benefits account for 28%. Ten years ago, it was the biggest expense at 39%. But several major airlines filed for bankruptcy and that allowed them to renegotiate labor contracts.
• Aircraft maintenance, airport landing fees and travel agency commissions account for 18%.
• Aircraft lease payments, food and drinks and in-flight entertainment account for 5%. And that's even with most airlines no longer serving peanuts.
• Another 14% goes to miscellaneous costs, such as updating reservation systems and marketing partnerships with other airlines.
• The price of a domestic round-trip ticket this summer is forecast to be $430, on average. That includes taxes but excludes baggage fees and other services.

While airfares should break nominal records, they are not nearly as high as they were a generation ago once inflation is factored in. The average ticket in 1978, the year airlines were deregulated, was almost $650 in today's dollars. Deregulation created more competition, which ultimately drove down prices for passengers.

With oil close to $100 a barrel, fuel has become the expense that preoccupies airline executives more than any other. It is the reason airlines started charging for checked baggage in 2008 and why they have raised fares more than 10% this year.

Baggage fees — typically $50 per bag, round-trip — have added more to the cost of flying since 2008 than fare increases have.

Despite the rising fares and fees, demand for air travel is rising. The airlines expect 206 million passengers this summer, a 1.5% increase from last year, according to the Air Transport Association.