The airline industry is in trouble for four major reasons

airline industry
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You could be pondering if you have ever taken a flight. How is it even possible? Given how much they cost, why is the airline industry suffering such severe losses? Between Rs 15,000 and Rs 17,000 billion were lost in the Indian aviation industry in fiscal year (FY) 23.

Bankruptcies are not unheard of in the airlines industry. One of the sectors most severely hit by COVID-19 is the airline industry. Due to the sudden drop in demand, aviation traffic came to a virtual halt. Worldwide, the pandemic has had a significant influence on civil aviation, and the nation’s aviation industry—including its airports, airlines, and related services—has also experienced financial strain. Markets did gradually begin to open up over 2020–2021; nevertheless, recovery was unclear and uneven, with domestic travel recovering more slowly than international.

airline industry
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Although they offer a crucial service, airlines face significant obstacles to profitability for reasons like the persistence of loss-making carriers, bloated cost structures, susceptibility to exogenous events, and a bad reputation for customer service. Although a few low-cost carriers have been able to record recurring profits, profitable airlines are generally hard to come by.

Why is the airline industry associated with ongoing losses and insolvency despite the essential nature of the service it offers and its great contribution to making the world a smaller place? We outline 4 causes of airline industry ongoing difficulties.

1.Fuel prices

The main expense for any airline industry and the main cost for the airline industry is fuel, or, to put it another way, the raw material for the industry.

Three variables affect fuel costs: the number of departures, the market’s average fuel price, and the amount of fuel utilized during each departure. By taking these into account, we can determine the average daily fuel expenditure for an airline.

2. High-cost other fixed and variable expenses

Due to the high cost of aircraft, airlines are required to make significant lease or loan payments regardless of the state of their business. Large commercial aircraft can last up to 25 or 30 years. Salary expenses are another element of relatively fixed costs that must be incurred month after month because airlines need large labor forces to manage their intricate operations. Few airlines can overcome the enormous challenge of their high-cost structure, especially given the security costs that have increased due to terror threats.

3. The cost of leasing

The cost of purchasing an aircraft has caused airlines to lease them instead of owning them these days. They pay lease rentals, which make up a sizable portion of the overall cost that an airline endures, in exchange for the continued use of the aircraft. It is extremely easy to figure out the leasing cost because it increases with the number of aircraft a company owns.

4. Competition

People choose an airline that offers affordable tickets because there are so many of them available.

The importance of the services is not as high as it once was. Passengers are willing to change to a less expensive, less opulent airline that provides fewer services. Each airline begins lowering its rates in order to attract consumers and combat competition, which lowers the income per ticket for all the airlines.


No one can predict what the future will bring for this business, but one thing is for certain: the airline industry has a very high potential for growth. Despite the industry’s fierce competition and problems, it has experienced double-digit growth. The government is building airports in multiple places despite the fact that the road ahead is incredibly difficult to navigate.

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