http://www.economist.com/blogs/economist-explains/2014/02/economist-explains-5
Why airlines make such meagre profits:
"Despite incredible growth, airlines have not come close to returning the cost of capital, with profit margins of less than 1% on average over that period. In 2012 they made profits of only $4 for every passenger carried."
One of the main problem's in contemporary aviation is the majority of planes, airports, and air-traffic control are monopolies;
Another major problem is the vulnerability to negative external factors or events such as 9/11, flu outbreaks, and rises in oil prices.
But as airlines increase efficiencies and capabilities in the context of capacity, marginal profits could increase around 2% which doesn't seem like an appropriate increase from this recent plateau, however it is a viable step at this point even compared to other markets.
One of the main problem's in contemporary aviation is the majority of planes, airports, and air-traffic control are monopolies;
Another major problem is the vulnerability to negative external factors or events such as 9/11, flu outbreaks, and rises in oil prices.
But as airlines increase efficiencies and capabilities in the context of capacity, marginal profits could increase around 2% which doesn't seem like an appropriate increase from this recent plateau, however it is a viable step at this point even compared to other markets.
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