This is the reason why most Airlines go into losses


Airlines are a multi-million dollar business and industry in totality is humongous. With the aviation service only booming with the forthcoming future, the need for more ground support equipment, better airport infrastructure and better airport facilities and aircraft are needed. But considering the fact that most airlines have been seen to go into losses every year, why is it that this multi-million dollar industry has giant losses.

Service Matters

In recent news, we came across numerous stories where airline services were highlighted and the dark reality that exists behind those glittery concocted ads they post all over. Airlines are in loss due to the extraordinarily poor service most airlines provide. The prices do not do justice to the quality of services received by the customers. The nuisances of an airport check-in were not enough that the customer had to suffer at the poor uncaring act of service by the airlines that overcharger for everything.

Airlines not yielding profit and their impact

There are many airlines in the industry that are not particularly benefitting from their business. Yes, that is true. These could be both small and large scale airlines. The reason why these continue with their business was cited as the stakeholders. Closing an unprofitable airline is not an easy task. You have to think about the consequence of shutting a business that has a multi-million dollar investment, it has a huge staff working in it and has numerous other stakeholders and creditors. Also, the economic disparity it might cause to the country. The drawbacks of these unprofitable airlines being in the industry is they tend to influence the pricing and have to keep it up with their incurrings and other big players in the market, which inversely affects other players and they end up keeping the pricing neck to neck.

Unsteady returns with higher inputs

It is evident by far that the aviation industry has huge inputs with their equipment and airline material costing extensively huge amounts. An airline setup can incur millions of dollars, but the returns are not specific. Huge investments go in to running an airline which could be sourced only from banks in the form of loans to keep all legit. Once in place, the business would entail extensive ground support equipment, requisite infrastructure, labor, and other components. But the returns from all of this? Unsteady though no business is set up without assured profit, with the airline industry – costs like fuel, security, ground support equipment and ground support equipment service can vary.

It is undeniable that the airline industry plays an important role in connecting the masses, helping in globalization and being an important fraction that influences a country’s economy. They are there are certain factors that have heavily influenced an airlines performance, its ROI, its stand in the economy and its services and pricing as well. Though there is more to the above state factors, the industry continues to thrive due to its indispensable role.

Leave a Reply