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Your Airfare and Airline Profits

by Elaine Schwartz    •    Jul 1, 2012    •    371 Views

What does your airline ticket pay for? In order of size, these represent the expenses for a US Airways flight according to WSJ journalist Scott McCartney:

  • Fuel (close to 30%)
  • Salaries (maybe 20%)
  • Buying and leasing planes (16%)
  • Federal taxes (14%)
  • Total maintenance (11%)
  • Other including food, lost luggage, bumping people off flights (9%)

 

WSJ concludes that only 1% is left for profit–a $164 profit for every $16,400 an airline spends.

But, the cost to fly one seat one mile does vary considerably. For Southwest it is 12.96 cents while Delta, at 14.76 cents, is close to 14% more.

Or, we could look at “load factors.” Again, Southwest needs fewer people on a plane than any other airline to exceed its break even point.

This takes us to airline industry profitability:

airline profit margin

From businessinsider.com.

And finally, our graph takes us to Richard Branson: “How do you become a millionaire? Start as a billionaire and then buy an airline.”

For information on the airline industry, WSJ journalist Scott McCartney is a good columnist to follow. Here and here are McCartney articles I used for airline data while Seeking Alpha, here and here, provided a thorough analysis of the industry. My graph was from Business Insider.

 

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