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Although the aviation industry appears to be strong, profit figures and the paper trail of financial statements show that its components have not been as consistent as they might appear. In fact, in the past few decades, many of the airlines have turned out a loss at the year-end review. This was due to a number of factors, including starting off with a niche market or competing against much cheaper travel alternatives like ships, trains, and other road vehicles.
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With the rise of the average American’s purchasing power– and interest in seeing other parts of the country and the world– the airline industry’s profitability seems to have stabilized. In the last decade, an increasing number have reported end-of-year profits and record revenue. Just last year, the year-end financial statements of 10 airlines reported full-year results, garnering a combined profit of $152 million. However, a closer look at the figures and a quick calculation of the number of seats sold in 2012 reveal some rather disconcerting information: the profit from revenue of these 10 airlines falls around 0.1 percent, which means for each passenger they carried, America’s top-grossing airlines made an appalling 21 cents.
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Surprisingly, that was not the worst profit record for the industry. Although airlines are still in their infancy in terms of the profit they generate, they have been present and in-demand for decades, and– with travel becoming increasingly necessary for work and everyday commute– are clearly not about to become obsolete.
What airlines profit reflects down the supply chain, as Hamilton Sundstrand’s CFO, Eric Visselli, might know. Read more about his insights on the airline industry on this website.
The rising cost of airplane fuel may also affect profit.
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