Why airlines struggle to stay profitable

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Passenger airlines are a crucial industry in the global economy, but the sector is also extremely volatile. Why do airlines struggle to stay profitable? Watch the full video here:

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Airline stocks have been on a wild ride since the beginning of the pandemic, which shows just how volatile the sector can be.

"It seems that airlines once or twice a decade are hit with these really hard-to-process exogenous shocks, whether it's something like 9/11 or the Great Recession," said Adam Gordon, managing director and partner at Boston Consulting Group's Airline Practice.Despite the risks, the industry has experienced some periods of consistent growth.

"If you just step back and you think about what service airlines are offering, they're putting you in a metal tube, taking you up to 40,000 feet, and transporting you in relative or absolute comfort at hundreds of miles an hour to get from point A to point B. And if you think about the substitutes for that service, like, there really aren't any," said Gordon.

"So it's kind of surprising to me that an industry that delivers that kind of a service and does it with an absolutely impeccable operational and safety record is able to come under such pressure," he added. Watch the video above to learn whether investors should steer clear of the sector and why passenger airlines struggle to stay profitable.

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I tried to watch the video, but the audio and video were very much out of sync.

Airlines operate in a complex ecosystem, affected by numerous factors such as fuel prices, geopolitical events, and technological advancements. Staying profitable requires careful management of these factors and strategic planning for the future. It's a challenging industry.

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Simply because, we don't have teleportation devices yet - on the commercial market. :)

In the past the airlines were subsidized through regulation. It supported domestic plane makers, let Boeing own the airline trade, and provided a huge reserve air fleet for the next war, and all those pilots! Podunk cities in America got mandatory service. Fares were high, but

Who said they have to be profitable? There is a huge misunderstanding here, once they fail their stock price moves higher as the Fed will cover up all their mistakes with fresh cash that is created out of thin air! This makes me wonder why we pay taxes ?.......

Regulated Monopolies are not really Capitalist or Socialist. They are Mercantilist, left from a time when the King was more like a Mob Boss. And the opportunity to monopolize a product or service and put the Squeeze on was what Government Sold.

Continuous 1500 page bills are crucial and detrimental to the USA. Keep sending billions and trillions to Ukrain. Raise taxes on your people before they can afford it. What do you care you're all DEAD before it takes effect.

This has been a mystery for many years and every generation of airline crew has tried to solve on a long 4 day. yet yet !! no one will listen to them. Just ask airline crewlife pilot

Labor and capital intensive industry.

I have never met an investor who claims to be able to scale the business model, everyone says 'hands off' from the sector.

The global economy, the crisis will also globalize, no country can be alone, the United States will not be exception!

It's simple they pay themselves too much put the money back into the company

T_ii_z

The airline industry survives by gouging people and providing bad service when demand is high, and demanding government bailouts when they head into bankruptcy. Their success is tied to fuel prices and anticipating demand. Fleet management is very difficult.

Volatility is a bitch, especially for large capital sales sector hinged on volatile fossil prices 😇 Recurring value growth is the solution

They have very slim profit margins regardless but their own actions in regards to customer service, or lack their of, have swayed that further against them. Also, their last min ticketing pricing for the business traveler encourages video conferencing

It all happened when they started charging for bags and carry-ons.

Their blatant disregard for their passengers (eg cancelled or extremely delayed flights) don't help! No loyalty to the people who actually pay for their substandard customer service

Airlines are a casflow industry. Any fluctuations in revenues and costs are felt instantly

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because the Law of the Tendency of the Rate of Profit to Fall is combined with the labor force already having been pushed to the absolute limit in terms of low wages and high labor intensity

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Airlines are tough business with fuel costs and unions. Check our vids. LikeShareFollow

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When do we see solar or battery powered autonomous airplane as that seems to be the only substitute

I agree. The airline business was certainly lucrative until Covid-19 arrived. I read in the news that in the Philippines, Philippine Airlines recently declared bankruptcy.

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Too much government regulation and fees

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