Does Winter Weather Affect Airlines' Profits?

Snowstorms can cause major delays and travel headaches for fliers and airlines alike. But to what extent does winter weather actually affect airlines’ bottom line? This has been a relatively mild cold season so far. Does that mean carriers are enjoying greater profits? 

A slow season

[AD_SWAP300X250A]

For most of the U.S., January and February are the slowest travel months of the year. On one hand, this seems like good timing. If business is going to be relatively slow anyway, mass cancelations won’t matter to airlines as much, right? On the other hand, delays and cancelations could hit what little profits are to be made from off-peak flights. 

Past winters give us insight into how airlines perform during the snowy season

In 2011, winter storms caused delays that cost airlines more than $600 million in profits. There were different storms that took place all around the country. Snow and ice caused mass cancelations from Texas to New England. Alone, the string of storms would have been a setback, but a minor one all things considered. However, the industry was confronting other issues at the same time. 

In ’10, airlines were finally starting to get back on track. There had been good years (2006 brought record profits), but consistency was still proving elusive. Fliers had accepted those annoying-but-profit-giving fees and more casual travelers were interested in taking to the skies now that the memory of 9/11 was starting to wear off. 

The 2011 winter storms hit this fragile growth especially hard because they were coupled with rising oil prices. The spiking cost of crude turned a bad quarter into a bad year. The lesson from this year was that a delay-ridden season was unavoidable, but it could be made much worse by other issues (such as rising fuel costs). 

A harsh but profitable winter

The industry experienced a more positive wintertime scenario in 2013-2014. Things looked dire after a string of storms and bad weather brought more than 80,000 cancelations to airports around the country. Analysts were predicting a dismal quarter, but when it came time to report earnings, both Delta and American announced impressive numbers. American’s $480 million in 2014 Q1 profits was a record, and Delta’s $213 million was a surprise considering that the airline basically broke even during the same period the previous year.   

This time, the “other” variables worked in airlines’ favor. The major mergers that had taken place over the past five years were finally starting to lead to less competition. Also, fliers were willing to pay higher fares and fees, so the airlines were making more money off of each seat once their planes finally got off of the ground. This "perfect profit storm" more than offset the money lost from snowstorm cancelations.  

Canceled flights are not a total loss

One other thing to consider is that canceled flights are not a complete loss for airlines. The cost of fuel (which was higher in 2011 and 2014 than it is now) is saved, and so are some of the wages paid to staff on the ground and in the cockpit. The other consolation of a harsh winter is that there is more demand on routes to places like Mexico and the Caribbean as people try to escape the dismal weather at home. 

So... yes winter weather can affect airline profit, but other variables can either compound the problem or negate it.