We all remember the terrible year of 2008 when soaring jet fuel prices brought huge losses for airlines in the United States and across the world.

Well, the Energy Information Administration is out with its 2011 update. Guess what? Jet fuel prices were higher in 2011 than in 2008.

Year Price per gallon
1990 $0.762
1991 $0.608
1992 $0.572
1993 $0.529
1994 $0.493
1995 $0.494
1996 $0.611
1997 $0.560
1998 $0.403
1999 $0.498
2000 $0.850
2001 $0.725
2002 $0.687
2003 $0.824
2004 $1.151
2005 $1.715
2006 $1.923
2007 $2.131
2008 $2.964
2009 $1.664
2010 $2.149
2011 $2.998

U.S. Gulf Coast jet kerosene prices, BTS

But changes in the airline industry since 2008 mean that most U.S. airlines will make money in 2011. In fact, analysts expect most major carriers – again, American Airlines is the notable exception – to post a fourth-quarter profit when they begin reporting earnings next week.

“In what is traditionally a losing quarter, the airlines are forecast to generate net income of $204 million which includes a net loss of $336 million for bankrupt AMR Corp.,” analyst Michael Derchin wrote in a research note Friday. “This is clearly shaping up to be a solid quarter for most airlines.”

What changed between 2008 and 2011?

First, the big airlines have controlled their capacity, giving them more control over pricing. There’s no big mover that is pumping capacity into U.S. markets. The growth is coming from small guys like Spirit Airlines and Virgin America, which remain a small percentage of the total pie.

For example, these three big airlines have reported their full-year 2011 traffic and capacity. As the chart shows in billions of available seat miles, all of them are smaller than they were prior to 2008 (the Delta numbers in 2007 combine Delta and its merger partner, Northwest Airlines).

Airline 2011 2007 Change
American Airlines 154.3 169.9 -9.2%
Delta 203.4 213.9 -4.9%
US Airways 72.6 75.8 -4.3%
Total 430.3 459.6 -6.4%

The reduction of 29.3 billion ASMs for the three carriers is greater than the total 2011 capacity (26.5 million ASMs) of Alaska Airlines, for example.

A reduction in supply is generally enabling airlines to raise fares over time.

Secondly, the airlines are pocketing billions of dollars in ancillary fees that they didn’t charge back in the day.

In the first half of 2011, U.S. airlines collected $2.88 billion in bag fees and feees fir reservation changes and cancellations. That’s up $1.80 billion from the first half of 2008, and up $2.24 billion from the same period of 2007.

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