MONEY Airlines

Why the Era of Airfare Price Wars Is Gone, Perhaps Forever

people in airplane seats
iStock

The airlines have little reason to compete on price.

Airline profits have soared to record highs recently, and the overarching reason why the industry has been so successful is that the few big players that still exist have stressed “discipline.”

The New York Times recently noted that “discipline” is the go-to buzzword for airline executives. It’s most often used in conjunction with “capacity,” and the gist is that airlines have been focused on limiting the number of flights and seats. So long as supply of flights is relatively low, airfare prices—and profits—can remain high.

The question now being asked—not merely by travelers annoyed by high prices, but by a Justice Department investigation—is this: Is the airline industry’s much-heralded “discipline” illegal?

This week, the Justice Department sent letters to American Airlines, Delta Air Lines, Southwest Airlines and United Airlines—the nation’s four largest domestic carriers, accounting for 80% of flights within the U.S.—concerning “the undesirability of your company or any other airline increasing capacity.” The airlines were asked to turn over flight and capacity data accrued since 2010, with the idea that the Justice Department is investigating whether any “unlawful coordination” on capacity, and by extension on pricing, has been taking place.

The investigation comes a couple of weeks after U.S. Sen. Richard Blumenthal (D-CT) publicly accused the airlines of “potential anti-competitive, anti-consumer behavior and misuse of market power.” In his complaint, which urged the Department of Justice to pursue the matter, Blumenthal quoted a previous DOJ report that summed up how airfares have gone up steadily and largely unchecked by competition in recent years:

“The structure of the airline industry is already conducive to coordinated behavior…the legacy airlines closely watch the pricing moves of their competitors. When one airline ‘leads’ a price increase, other airlines frequently respond by following with price increases of their own.”

This scenario has become all the more common in the post-merger era of oligopoly in the airline industry. With fewer competitors, there are fewer players to worry about having to get on board with each successive fare increase. Considering that unprofitable routes have been cut and flights are fuller than ever, there is little reason for an airline to break ranks and refuse to raise fares, let alone to dare engage in pricing wars.

In lieu of the desperation to fill seats via bargain flight prices like they did regularly in the past, the airlines have focused lately on maximizing the profitability of each route, with higher fares, more add-on fees, and no worries about having to drop fares to match some upstart competitor.

This behavior is undeniably anti-consumer. We’ll have to see if it’s deemed illegally anti-competitive, and what if anything rulings or fines can possibly do to change the (un)competitive atmosphere in the consumer’s favor.

The airlines might point out that the investigation is occurring just as flight prices are, in fact, getting cheaper. Flight search data indicates that, overall, flights this summer are a few percentage points less expensive than they were a year ago. Still, considering that fuel prices have decreased dramatically, it would be reasonable to expect airfare prices to drop significantly further, and for airlines to add capacity to take advantage of lower costs.

But doing so would be exhibiting a lack of “discipline,” and would be seriously frowned upon by many airline executives and airline investors alike. In late May, airline stocks tanked after a move was announced by Southwest Airlines. The airline’s crime? It was bumping up expansion plans slightly. The decision might seem sensible—fuel prices are low, flight capacity is high, so why not add flights and fight for more market share?—but investors punished Southwest, and the entire airline industry, due to concerns that “Domestic capacity discipline has effectively vanished,” as Wolfe Research airline analyst Hunter Keay put it.

On Wednesday of this week, airline stocks took another significant dip. This time, the blame went to the Justice Department’s investigation into “unlawful coordination” among the airlines. It goes to show that there could be something to the concept that when airline stocks take a beating, it’s probably good news for travelers.

The larger, unfortunate truth is that, no matter what the Justice Department finds in its investigation, there’s no getting around that there’s very little legitimate competition left in the domestic airline market. With fewer competitors dominating domestic flights, the age of discipline—and, perhaps, collusion—is here. That’s why the era of flight pricing wars is dead.

MONEY freebies

12 Totally Free Airline and Hotel Perks

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peepo—Getty Images Rosewood Hotels' perfume butlers will give guests a free spritz of perfume from a curated selection delivered to your hotel room.

Like wine, beer, slippers or perfume? Read on.

Checking a bag. Snacking on the plane. Getting early access to your hotel room.

Nowadays any of these once gratis activities can come at a price when you travel, draining the fun—not to mention funds—from your vacation plans.

But take heart: There are some surprisingly delightful and useful perks you can still score at no cost—from DirecTV at 35,000 feet (in economy class!) to loaner GoPro cameras at your hotel.

And that’s just two of the dozen travel perks we’ve unearthed that won’t cost you a dime on your next trip.

6 Airline Perks That Are Totally Free

JetBlue: Checking Your E-mail—and the Game
As JetBlue is pleased to announce: “Ladies and gentlemen, please feel free to roam about the Internet.”

Whether you want to binge-watch a reality show or root for your favorite team, the airline’s new Fly-Fi service, available on most JetBlue aircraft, has you covered with free DirecTV.

Japan Airlines: Finding Your Zen at 35,000 Feet
Flying internationally isn’t exactly comfortable—all the more reason to applaud Japan Airlines for its creature comforts.

The carrier distributes colorful slippers to all passengers, and will even hand out bamboo massage sticks to soothe swollen feet. Forgot your toothbrush? On some routes, you can ask for a complimentary amenity kit, complete with toothbrush set, earplugs, and an eye mask.

Southwest: Stowing Two Bags at No Cost
Fliers enjoy a host of freebies, starting with two free checked bags. Now that JetBlue has introduced bag fees, Southwest is the only major U.S. carrier to provide this service gratis.

You can also browse free ebooks during your flight, or tune in to the “Live at 35” concert series, in which artists like Imagine Dragons and Plain White T’s surprise travelers with Southwest-special concerts.

Porter Airlines: Toasting to Your Vacation
Enjoy free wine, beer and snacks when you fly with Canadian carrier Porter Airlines. Plus, Porter terminal lounges are open to all levels of passengers—so you can prep for your flight with free newspapers, refreshments and WiFi.

Delta: Entertaining Yourself With Endless Entertainment
With the Delta Studio video streaming service, international, First Class, Delta One and Delta Comfort+ passengers can catch new and highly rated films and TV shows, as well as tunes from featured artists for free. The airline also produces its own playlists by genre.

Domestic flyers in economy also enjoy free movies, music and TV via Delta Studio, although the selection is more limited.

Virgin Atlantic: Wining, Dining and Dreaming
Virgin Atlantic’s bar service includes at least one free drink per passenger (more for longer flights), while kids under 12 are treated to meals from celebrity chef Lorraine Pascale, star of the Cooking Channel’s Fresh, Fast, and Easy.

For overnight flights, snooze packs containing an eye mask, earplugs and socks are given to all passengers—so it’s easier to get some sweet shut-eye on your red-eye.

6 Hotel Perks That Are Totally Free

Rosewood Hotels and Resorts: Spritzing a Signature Scent
In the words of fashion icon Coco Chanel: “A woman who doesn’t wear perfume has no future.” Sure, that may be harsh—but it does feel good to freshen up with a splash of a favorite fragrance.

Enter Rosewood Hotels’ 24-hour Fragrance Butler who will bring a silver tray with a curated selection of perfumes and colognes to your room on request. It’s a commitment-free way to try a new scent—and save you the hassle of having to pack your own perfume (and likely check a bag because of it).

Sheraton: Personalizing Your “Personal Fitness” Routine
If breaking a sweat in the fitness center isn’t really your style, you can request a complimentary “Gym-In-A-Bag” and use it in the comfort of your own room. The kit includes an exercise manual, mat, resistance band, massage stick and a foam roller.

Marriott: Starring in Your Own Hi-Def Adventure
To document your trip like a pro, simply borrow a complimentary high-definition GoPro from participating Marriott hotels.

Whether you’re climbing in Cusco, snorkeling in the Caribbean, or shooting selfies at the hotel pool, share your GoPro moments on social media and you could be featured on Marriott’s Travel Brilliantly site.

Hyatt: Staying the Course While Getting Fit
Planning out a jogging route in a new city can be daunting, but with Hyatt’s Stay Fit Fitness Concierge service, you don’t have to worry about taking a wrong turn. Simply check out a GPS watch at the front desk, so you can map and monitor your running or biking course.

Kimpton: Treating You—and Fido Too
The pet-friendly chain lets you can check-in your furry BFF at no extra charge. Pet owners can also request complimentary pet beds, food, bowls, courtesy bags—and a list of parks, groomers and boutiques.

Traveling solo? You can borrow a goldfish for your room through Kimpton’s Guppy Love program.

As for human perks, the new Nightcap Program provides a free evening libation—such as port, brandy or cognac—paired with cookies, cheese or other goodies.

Fairmont: Enjoying the Presidential Treatment
Joining a hotel’s loyalty program is typically free and can be a worthwhile investment—such as Fairmont’s President’s Club. Signing up qualifies you to receive myriad free benefits that may include Internet access, phone calls, health club use, a shoeshine and loaner BMW bikes and TaylorMade golf clubs.

More from LearnVest:

MONEY Travel

JetBlue’s New Outdoor Park Lounge Looks Totally Amazing

Paul Rivera/JetBlue JetBlue's new outdoor waiting area at JFK's terminal five.

This place is so nice you won't want to leave to get on the plane.

Starting Wednesday, waiting for a JetBlue flight in New York will be like a walk in the park. Because there will be an actual park.

The airline announced today it is opening a new outdoor space at John F. Kennedy airport, featuring seating, planters, and a miniature lawn. The new area, which spans 4,046 square feet on the roof of JFK’s terminal five, will also include seating for 50 people, free wifi, food trucks, and a fenced-in dog run with synthetic grass, along with a view of the New York City skyline.

JetBlue says the waiting area, known as the T5 Rooftop (as in: Terminal 5), is open all summer between 10 a.m. and 6 p.m. and will be accessible to all ticket holders once they clear security.

“As rooftop bars, sunbathing and summer enjoyment are such a big part of living in New York City, we wanted to bring this unique aspect to customers traveling through T5,” Jamie Perry, JetBlue vice president of brand and product development, said in a press release.

TIME Airlines

Feds Suspect Airlines Working Together to Keep Fares High

Justice Department investigating potential "unlawful coordination" among some airlines

(WASHINGTON)—The U.S. government is investigating possible collusion among major airlines to limit available seats, which keeps airfares high, according to a document obtained by The Associated Press.

The civil antitrust investigation by the Justice Department appears to focus on whether airlines illegally signaled to each other how quickly they would add new flights, routes and extra seats.

A letter received Tuesday by major U.S. carriers demands copies of all communications the airlines had with each other, Wall Street analysts and major shareholders about their plans for passenger-carrying capacity, or “the undesirability of your company or any other airline increasing capacity.”

The Justice Department asked each airline for its passenger-carrying capacity both by region, and overall, since January 2010.

Justice Department spokeswoman Emily Pierce confirmed that the department is looking into potential “unlawful coordination” among some airlines. She declined to comment further or say which airlines are being investigated.

On a day when the overall stock market was up, stocks of the major U.S. airlines ended the day down 1 to 3 percent on news of the investigation.

American Airlines, Delta Air Lines, Southwest Airlines and United Airlines all said they received a letter and are complying. Several smaller carriers, including JetBlue Airways and Frontier Airlines, said they had not been contacted by the government.

The airlines publicly discussed capacity early last month in Miami at the International Air Transport Association’s annual meeting. After hearing about that meeting, U.S. Sen. Richard Blumenthal, D-Conn., requested a Justice Department investigation.

The department had tried to block the most recent merger, the 2013 joining of American Airlines and US Airways, but ultimately agreed to let it proceed after the airlines made minor concessions.

Some Wall Street analysts argue that to remain financially strong, airlines should not expand capacity faster than the U.S. economy. And from January 2010 to January 2014, they didn’t.

In that 4-year period, capacity on domestic flights was virtually flat while the U.S. economy grew about 2.2 percent per year. From January 2014 to January 2015, however, the airlines expanded by 5.5 percent, topping the economy’s 2.4 percent growth for 2014.

Thanks to a series of mergers starting in 2008, America, Delta, Southwest and United now control more than 80 percent of the seats in the domestic travel market. They’ve eliminated unprofitable flights, filled more seats on planes and made a very public effort to slow growth to command higher airfares.

It worked. The average domestic airfare rose an inflation-adjusted 13 percent from 2009 to 2014, according to the Bureau of Transportation Statistics. And that doesn’t include the billions of dollars airlines collect from new fees. During the past 12 months, the airlines took in $3.6 billion in bag fees and $3 billion in reservation-change fees.

That has led to record profits. In the past two years, U.S. airlines earned a combined $19.7 billion.

This year could bring even higher profits thanks to a massive drop in the price of jet fuel, airlines’ single highest expense. In April, U.S. airlines paid $1.94 a gallon, down 34 percent from the year before.

That worries Wall Street analysts and investors. Cheap fuel has led airlines to make money-losing decisions in the past, rapidly expanding, launching new routes and setting unrealistically low fares to lure passengers. Airlines already flying those routes would match the fare, and all carriers would lose money.

Such price wars are long gone, but today’s low fuel costs along with recent comments from airline executives have given the market jitters.

Airline stocks plunged in May after the chief financial officer of Southwest said at an industry event that the carrier would increase passenger-carrying capacity by 7 to 8 percent, an increase over an earlier target.

Wolfe Research analyst Hunter Keay, who hosted that May 19 conference, told investors in a note afterward that the big airlines are unhappy to be restraining growth while low-cost airlines like Spirit grow much faster. He urged the major airlines to “step up” and cut routes for the good of the industry.

On June 1, Southwest CEO Gary Kelly said his airline would cap its 2015 growth at 7 percent. That sparked a rally in airline stocks, as investors were more assured that capacity growth would be limited.

Keay said Wednesday that he had not been contacted by the government and doesn’t think the airlines have been acting inappropriately.

“The analyst community is bringing up the subject. You certainly can’t fault an airline executive for responding to the question,” Keay said. “The capacity continues to grow at the airports people want to fly to and air travel remains a particular good value for the consumer, especially for the utility that it provides.”

TIME biofuels

Your Next United Flight Could Be Powered by Animal Droppings

Chicago's O'Hare Airport Hosts Air Industry's World Route Forum
Scott Olson—Getty Images United jets.

This could be a big step forward for the biofuels industry

Get ready for a slightly ripe scent on your next United flight — the airline is going to power a plane with animal waste, reports the New York Times.

Ok, so you won’t actually be able to smell the fuel — for passengers, in fact, almost nothing will be different when a plane takes off from Los Angeles this summer fueled only by animal’s droppings and oils from animal fats.

It will be a big step, though, for the biofuels industry. The Times notes that companies that make alternative fuels have long seen airlines as potential partners, and this United flight could be a sign of things to come.

For more on how the flight will work, and what it could mean for the industry, head to the Times.

MONEY Travel

How to Cancel Your Flight Reservation Without Getting Gouged

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Dave and Les Jacobs—Getty Images

Familiarize yourself with the 24-hour rule.

Have you ever booked an airline ticket only to see that the fare dropped soon after you made your purchase? Unfortunately, the cheapest airline tickets tend to be non-refundable, so price-sensitive travelers usually end up not profiting from that price drop.

Have you ever had unexpected news pop up right after booking your flight that requires you to change or cancel your flight? You may have to pay fees to change your flight or end up stuck with the ticket you can no longer use if your plans change.

In the first case, you should be able to cancel and re-book your flight at a lower rate if you act within 24 hours of your original purchase thanks to a little known federal rule. If your plans have changed, you could even straight out cancel your flight for a full refund.

How the 24-Hour Cancellation Rule Works

The United States Department of Transportation (DOT) put the 24-hour no-charge cancellation rule into place, but they also stipulate the purchase must be at least a week in advance of the flight departure date in order to qualify.

This consumer-friendly booking rule has been implemented in a few different ways depending on with which airline you choose to fly. Most airlines choose to allow you to cancel your reservation within 24 hours of booking as long as you meet the requirements of the rule. Airlines that follow the rule exactly as written include US Airways, JetBlue and Spirit.

However, some more generous airlines, such as Frontier and United, do not require you to make your purchase at least a week in advance. Delta is more flexible with the cancellation time period and allows you to cancel up until midnight on the day after you book your flight, which will normally give you at least a few more hours to find a lower fare or change your mind should something else pop up.

American Airlines follows the DOT rule in a unique way. It allows you to book your flight by putting it on hold for up to 24 hours, without charging you for the ticket. Once the hold expires, you have to pay for your ticket, pay a fee for an extended hold or let the ticket and pricing expire. This allows the airline to follow the rule without having to worry about the hassle of refunding any money. Once you purchase the ticket after the hold period, the sale is essentially final. To use this option, simply look for the hold option on the review and pay screen when booking a ticket on American Airlines’ website.

The most generous airline, as far as cancellation policies go, is Southwest. Southwest has neither fees for cancellation nor change fees. If you have to make any changes, you will get full credit for the price that you paid for your ticket. If you decide to change to a more expensive flight, simply pay the difference in fares.

Cancelling or Changing Your Flight Outside of 24 Hours

Once the initial 24-hour window passes, cancelling a flight gets a lot trickier. Each airline has its own policies regarding cancellation fees and change fees. Since many airlines have a handful of different fares you can buy, there are many different rules governing cancellation and change fees.If you need to cancel or change your flight outside of the 24-hour window, first check out your carrier’s website to read up on its policies. You might find a special exception that allows you to avoid fees based on your particular circumstance. If you cannot find what you need on the website, call the airline and speak to a customer service representative. It can’t hurt to ask.

Read next: The Absolute Worst Practice of Airlines Today

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TIME

Airline Checked Bag, Reservation Change Fees Just Hit a Record

Old airplanes are stored in the desert in Victorville
© Lucy Nicholson / Reuters—REUTERS

Some fees can reach a whopping $200

The U.S. passenger aviation industry set new records in the first quarter of 2015 for checked bag and reservation change fees, according to the Associated Press.

Airlines made $1.6 billion from those fees, the highest amount for a first quarter since bag fees were introduced in 2008.

Part of the reason for the climb is simply that more people are flying, with 3.2% more seats filled year-over-year, according to the report. Airlines are putting the fees on more passengers, though, and fees are getting higher — the AP notes that some fees can reach a whopping $200.

Over the past 12 months, the airline industry has pulled in $3.6 billion in checked bag fees and $3 billion is reservation change fees, the AP said.

MONEY Travel

America Just Saved Your Carry-On Bag

airline-luggage
Tetra images RF/Getty Images

A proposal that would try to shrink the size of carry on-luggage is getting "a comprehensive reassessment" after American backlash.

Last week, the International Air Transportation Association made waves in the travel world when it announced a proposal to reduce the size of airline carry-on luggage. The new specifications were a 20% smaller than what major U.S. carriers currently permit, leaving many travelers worried they might have to purchase new luggage if they wanted to bring them on board.

Now, the Chicago Tribune reports that the trade group, whose member airlines represent almost 85% of total air traffic, is backing down and beginning a “comprehensive reassessment in light of concerns expressed, primarily in North America.”

While the IATA, which is based in Montreal, gave the entire continent credit for shouting down its bag regulations, U.S. opposition may deserve the most credit. Senators Chuck Schumer (D-N.Y.) and Robert Menendez (D-N.J.) both ridiculed the plan, with Menendez expressing his suspicion that the proposal could be “another industry ploy related to baggage fees since dubious tactics, like hidden fees, are already used to trick consumers.”

Meanwhile, the Associated Press reports a U.S. airline group that includes American, Delta and United, the world’s three largest airlines, also came out against the bag standards.

Backlash against the smaller carry-on bags initially prompted the IATA to clarify that their proposal was not a hard cap, but rather an optimum size that would give qualifying luggage priority to stay on the plane in case the flight became too full. But on Wednesday, the organization backed off further and announced it was putting the plan on hold for reassessment.

As the Upshot‘s Josh Barro points out, the IATA isn’t exactly crazy to be encouraging smaller carry-ons—unpopular as the idea may be. “On average, commercial flights on American carriers rose from 73 percent full in 2002 to 83 percent full in 2014,” writes Barro. “Those trends, and the imposition of fees for checked baggage, have combined to mean overhead bin space is increasingly scarce, and airlines must more frequently gate-check carry-on bags, which delays boarding and annoys passengers.”

But he also notes policing luggage sizes can be too time consuming (and off-putting to passengers) to be cost-effective for airlines, which is why most companies don’t even abide by the current size limits. “In the past, U.S. airlines have not enforced their existing carry-on luggage standards, so American consumers continued to purchase the larger sized carry-ons,” Stephanie Goldman, a senior director for marketing at the luggage manufacturer Samsonite, told the Upshot.

Now, thanks to America, you can still bring those larger bags on your flight.

Read next: Airline Group Says Your Carry On Bag Should Be Even Smaller

MONEY Airlines

Airline Group Says Your Carry On Bag Should Be Even Smaller

You might have to pack lighter--and buy a new carry-on bag

On Tuesday, a trade group representing airlines around the globe published new guidelines for the size of carry-on bags. The International Air Trade Association says that if bags are limited to 21.5 inches high (standing up on wheels) by 13.5 inches wide by 7.5 inches deep, then “theoretically” everyone on a 120-seat plane should be able to bring a suitcase on board.

(The press release doesn’t elaborate on whether their theory accounts for duty-free-shop hauls and that guy in front of you who insists his weirdly-shaped garment bag can fit if you push down on the door really, really hard.)

According to the Washington Post, the new guidelines, which individual airlines may or may not choose to adopt, call for bags about 21% smaller than currently allowed by major U.S. carriers. (That’s measuring by volume.)

carryon2

Considering that many travelers intentionally purchase the largest carry-on bag possible in order to pack as much as they can, many pieces of luggage would be too big to be carried onto the plane if the change is made.

That’s a big if, of course. An American Airlines spokesman, for one, told the Post the carrier has no current plans to change the rules.

Here’s a look at the current rules for airlines (in inches), and how much your bag might have to shrink if they went with the new guidelines. One thing that jumps out is how varied the rules actually are.

American, United, Delta, Jet Blue, Aeromexico, Virgin Atlantic

Current policy: 22 high x 14 wide x 9 deep

How it would shrink if they followed IATA guidelines: 0.5 x 0.5 x 1.5

Change in volume: 21%

Southwest

Current policy: 24 high x 16 wide x 10 deep

How it would shrink if they followed IATA guidelines: 2.5 x 2.5 x 2.5

Change in volume: 43%

Air Canada

Current policy: 21.5 high x 15.5 wide x 9 deep

How it would shrink if they followed IATA guidelines: 0 x 2 x 1.5

Change in volume: 27%

Alaska Airlines

Current policy: 24 high x 17 wide x 10 deep

How it would shrink if they followed IATA guidelines: 2.5 x 3.5 x 2.5

Change in volume: 46%

WestJet

Current policy: 21 high x 15 wide x 9 deep

How it would shrink (grow) if they followed IATA guidelines: (+0.5) x 1.5 x 1.5

Change in volume: 23%

Spirit

Current policy: 22 high x 18 wide x 10 deep

How it would shrink if they followed IATA guidelines: 0.5 x 4.5 x 2.5

Change in volume: 45%

British Airways

Current policy: 22 high x 18 wide x 10 deep

How it would shrink if they followed IATA guidelines: 0.5 x 4.5 x 2.5

Change in volume: 45%

Air France

Current policy: 21 high x 13 wide x 9 deep

How it would shrink (grow) if they followed IATA guidelines: (+0.5) x (+0.5) x 1.5

Change in volume: 11%

Lufthansa

Current policy: 21.6 high x 15.7 wide x 9 deep

How it would shrink if they followed IATA guidelines: 0.1 x 2.1 x 1.5

Change in volume: 28%

Read next: Airlines Aren’t Making Nearly As Much Money As You Think

MONEY Airlines

Airlines Aren’t Making Nearly As Much Money As You Think

Passengers use self-service machines to check in for flights on Delta Air Lines at Detroit Metro Airport.
Jim West—Alamy Passengers use self-service machines to check in for flights on Delta Air Lines at Detroit Metro Airport.

Somehow all those fees don't result in monster profits.

Airlines charge customers for everything from a carry-on bag to a bottle of water, airfares are sky high, and there’s rarely an empty seat on a plane. Fuel prices are low as well. You’d think carriers would be making money hand over fist.

Somehow, though, the industry’s average profit is just $8.27 for each passenger that boards a flight. That doesn’t sound like much, and amounts to what is described as “a hard-earned 4% average net profit margin” by the International Air Transport Association (IATA) in a new report.

At its annual meeting in Miami Beach, Fla., on Monday, IATA revised its outlook for 2015 to a net profit if $29.3 billion, an upgrade from earlier projections of $25 billion, Yahoo News reports. Either figure would be a notable increase from 2014’s $16.4 billion net profits for the industry.

While this is all good news for the airline industry as a whole, not every region is booming. Airlines will profit $8.27 for every passenger carried on average, but North American carriers earn double that figure for each passenger on a flight, while airlines in other parts of the globe are much less profitable. In fact, North American airlines generate over half of global profits, pegged at $15.7 billion for this year. Europe, the second most profitable region, is expected to generate $5.8 billion in profit. Asia-Pacific, African and Latin American airlines are performing below average in terms of expected profitability.

In any event, higher profits compared to last year are expected, with low fuel costs acting as a major driver behind the industry’s improved outlook. An average Brent crude oil price of $65 per barrel is 36% lower than the 2014 price of $101.4, according to IATA.

Fuller planes are another factor. The overall number of passengers is expected to grow 6.7% this year, compared to 6.0% growth in 2014.

What does this mean for each of those passengers? IATA swears that, despite the rise of airline fees and airfares, the value of airline travel is outstanding. “The average return fare (before surcharges and tax) of $429 in 2015 is forecast to be more than 64% lower than 20 years earlier, after adjusting for inflation,” the report states.

Given airlines’ increasing profitability, will they stop or at least slow the pace of nickel-and-diming customers for every conceivable need once they’ve purchased their tickets? Perhaps that that’s too high an expectation.

Read next: Airline Group Says Your Carry On Bag Should Be Even Smaller

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