Historically, airlines have struggled to break even. The economic atmosphere improved this year, resulting in an inverse relationship for customer service. How sustainable is this growth? Can airlines afford to forget about the customer even for a second?
Large Numbers, Small Margin.
When we think about airlines, we think big stuff. A $787 billion dollar industry, flying 3.3 billion passengers for thousands of miles across the globe, with more than 1,400 new aircraft, creating 57 million jobs.
But when we get to the bottom line, the average profit an airline makes on each passenger is a mere $8.27 dollars, equivalent to roughly a 4% operating margin. That means that when you spend $200 dollars on a plane ticket to visit your family over holiday break, your airline retains profits big enough to afford two Double Whoppers at McDonald’s. And that profit is at an all-times high.
Compare this to other industries, like telecommunications and banking, where companies make margins of 11% and up to 15%, respectively.