Airlines only make $164 for every $16,400 they spend on the typical domestic flight, according to an analysis by Oliver Wyman at the Wall Street Journal.
That's a ridiculously low 1% profit margin.
The rest of the money goes to fuel (29%), salaries (20%), ownership costs (16%), government fees and taxes (14%), maintenance (11%) and other (9%).
The biggest thing eating away at profit is fuel, which has grown steadily more expensive. You can figure what will happens if it keeps rising.
Here's a look at profit margin over time, from a presentation by World Bank oil expert Charles Schlumberger on the death of the airline industry:
Please follow Getting There on Twitter and Facebook.
Join the conversation about this story »
Money Game Tech Crunch Personal Finance News & Advice Guide To Financial Fitness
No comments:
Post a Comment