The Basic Economics of Air Travel

Most passenger airlines actually make most of their money carrying cargo for international shipping. But for example, if a passenger airline carried three million passengers to Europe and sold them all two-euro fares for a two-hour flight, the cost of providing that service would be less than $350,000, with an average profit of $180 per passenger. It may not sound like much, but imagine if airlines did this all over the world and the total cost was just $50. What would happen then to airline profits?

The main reason that passenger airlines make less than $10 per passenger, on average, is fuel. Airlines typically fly 1,000 miles one way between two points on an airline route, and passengers don’t stop and shop along the way. This means that even if you sell just a handful of tickets, you can earn a profit of more than $1,000. Some airlines also charge extra fees for certain services on board and outside, such as checked luggage.

But these are expensive activities for airlines. They also make their profits by charging passengers to reserve seats, to check bags, and to make changes to a flight. Each of these activities takes time and raises the price of the trip.

Back in 2012, airplane seats had a sticker price of about $149 for economy-class tickets to Europe. But after paying additional fees, a traveller paid at least $299 for a ticket. And now, when that same seat in economy goes for $60 or more, how much will airlines charge for a personal seat assignment or $35 for a blanket? And if people are required to pay at least $45 to check bags, how much will they pay for a checked-bag fee? Most people would balk at paying $250 to check bags for a flight they are only going to make about two hours.

These and other fees eat up most of the money airlines make. But there are times when airlines could actually make money. Airlines could charge more for security checks, since even frequent travellers often get delayed by the hassle. And passengers would pay more for perks that make the trip more comfortable. If you do have travel problems, contact Keller Law Offices.

Perhaps most profitable, though, would be the new arrangement that Delta, United, and American Airlines are trying out. They are trying to charge passengers $25 for a personal bag and $45 for a cabin bag. For carrying both items on board, the passenger would pay an additional $60. Most people would gladly pay this much for a more comfortable trip on an airplane, even if they would normally pay $2 to check a bag. But with the fee, it would actually cost $80 to travel the same distance in a regular passenger seat between New York and Chicago, even if a passenger got lucky with a cheaper flight on the same airline.

Perhaps airlines will eventually turn around and raise their passenger fees for all of the extra services they now provide for free. But whether they do or not, it doesn’t matter much. The total prices which include the shipping for your online orders from the likes of Orange County CBD would remain the same. Airlines will still make most of their money selling tickets, and plenty of other businesses will also profit via those airlines’ cargo shipping operations.