In 1783, Air travel was discovered with hot air baloon. In 1903, planes started moving and now there are over 40,000 airplanes and over 1000 airline company but not all these companies are making profit.
Whene it comes to buying a plane ticket, one thing that a lot of people are concerned about is the price of the plane ticket. If a plane ticket is higher, the airline company should be able to deliver what the other airline company can't or people will go for the lower price.
Planes are very expensive and planes have a lifespan they are to use, each has a total amount of circle that it can go and when they exceed this circle niumbers, the plane has a high chance of crash but when they are maintained, they can still fly for a longer time.
Do you know that if airlines were to consider the amount to be made in comparism to the amount the plane was bought, airline companies would have been making billions in revenue but there are a lot of factors to be considered which includes; the calculation of Cost per available seat mile (CASM) which often covers expenses such as services, routine, operational cost in airport and everything that needs to be spent on a daily basis not excluding fuel and maintainance or landing cost. All this determines how much would be made by the company. Also, Revenue per available seat mile (RASM) is another way to check the revenue. This includes, luggage fee, first class payment and business class payment ticket. Although there are expenses and revenues, the airline company losses money for any plane that isn't full and seat not occupied during the takeoff is lost for live.
All seat must be full and the price must not be too low else the airline company looses money. The seats must be full because fuel for airplane is very expensive, maintainance of the plane is expensive, tax, vat and other surcharge makes its profitability low.
Countries could ban an airline from moving through their airspace and when this airspace is a good route, it would mean that the airline would find an alternative route which could incur more more expenses especially on fuel. Other factors could include natural disaster, war in country in route, and so on could lead to a loss as a result of a fall in passengers as well as increase in expenses.
This reasons are why airline industries are not making profit even when we have a lot of airline and they look very profitable as a business from the outside.
Reference
https://www.investopedia.com/financial-edge/0510/4-reasons-why-airlines-are-always-struggling.aspx
Very good reflections, companies should always seek profit.
Yes friend, profit is of a great importance.
Greetings @busted1
The manuscript, reflects that you have extensive knowledge in this area of the services provided by the airlines, I have my doubts whether this business is really not profitable, or in other words that the profits are not profitable enough, what strikes me is that in the market there is competition between airlines, which is why this ? In advance, thank you for socializing this type of content.
Not that I have extensive knowledge but I am only trying to learn.
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