High-profit years ending for airlines

America's passenger carriers have discovered that it's getting more expensive to run an airline

these days.

While summertime profits were fine, and travel demand remains robust, a number of airlines are facing higher bills from a variety of factors - labor contracts, significant airport renovation projects, technology spending and fleet upgrades.

The increase in expenses is creeping into 2018 and threatens to spoil higher revenues just as executives are crowing about how they will keep fares up for the holidays.

Note the absence of the usual culprit in these matters - fuel. While it's pricier today relative to 2016, jet fuel expenses still represent roughly the same burden for all carriers. Spot prices, however, have gained 24 percent over the past year.

That's one reason investors typically exclude fuel from calculations of cost per available seat mile, the industry's standard spending measure.

The real issue causing investor angst is how much non-fuel costs will increase in 2018. As of April, the industry's four largest players were all operating under new contracts with their pilots and flight attendants.

The higher expenses from these pacts had been viewed as largely a cost event for 2017, said Joseph DeNardi, an equity analyst with Stifel and Co.

'I think the expectation was that once you got through this year, where costs are elevated, the trend should improve next year,” he said. But that hasn't been the case, a fact DeNardi said has been a 'disappointment” for Wall Street.

'Legacy carriers still have very high costs, and consolidation didn't really improve the cost structure”