A4A: U.S. Airlines reinvest modest profitability in customer experience

Airlines for America (A4A), the trade organization for the major U.S. carriers, reported U.S. airlines achieved a modest 2% profit margin during the first half of 2013, reinvesting that profitability in nearly $6 billion in product and service improvements for customers, including new fuel-efficient aircraft, modern airport terminals and customer lounges, expanded Wi-Fi and in-flight entertainment, gourmet meal offerings and more. John Heimlich, the chief economist for A4A, said airlines "made the transition from razor-thin margins to paper-thin margins" but cited volatile fuel costs, the airlines' single-largest expense, as a constant threat to profitability. He noted that the industry's first-half profits would have been erased by an increase in jet fuel prices of just 20 cents per gallon. Since the end of June, prices have already increased 26 cents per gallon.

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