How airlines make money on seats

Running an airline is incredibly difficult. This video will provide some basic background on seat pricing compared to the class of seat. What the video talks about is income and that is a long way from profitability as it doesn't spend time on the fixed costs of the airplane and crew but also the many variable costs such as fuel, taxes, advertising, etc.

I rarely invest in airlines simply because they have such a difficult time controlling their variable costs. When those variable costs drop, they tend to drop for all of the airlines. This results in price-cutting to attract more customers which significantly lowers the income. While there is a significant "moat" for any new entries into the airline business, the companies that are there are extremely competitive to each other.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.