Why do most airlines lose money?

Airlines provide a vital service, but factors including the continuing existence of loss-making carriers, bloated cost structure, vulnerability to exogenous events and a reputation for poor service combine to present a huge impediment to profitability.



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In 2022, airline net losses are expected to be $6.9 billion (an improvement on the $9.7 billion loss for 2022 in IATA's June outlook). This is significantly better than losses of $42.0 billion and $137.7 billion that were realized in 2021 and 2020 respectively.

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Staffing shortage
Despite $54 billion of taxpayer funds funneled into airlines to keep them alive during the pandemic, most airlines greatly reduced staff during the first year of the pandemic when air travel, and fares, plunged.

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The most profitable passenger airline in North America in 2022 was Delta Air Lines, with operating revenue of almost 50.6 billion U.S. dollars, followed closely by American Airlines, with nearly 49 billion U.S. dollars in revenue.

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While you may think that airline tickets are pricey, much of the fare goes to cover costs. The biggest costs for airlines include labor and and fuel. Labor accounts for about 31% of operational expenses, followed by fuel: 22% of operational expenses.

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The biggest costs for airlines include labor, equipment, and fuel.

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Air Pressure Air is actually less oxygen-dense at higher altitudes. Meaning the higher you go, the less oxygen will be available to you. While you may not consciously notice any trouble breathing, you are likely to feel drained and tired once you land at your destination.

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Cost being the deciding factor for most fliers, airlines compete on price rather than service, and customers are willing to book the lowest-priced ticket regardless of the airline's reputation for customer indifference.

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Since the beginning of the year, airline stocks have signaled the industry is recovering from the Covid pandemic. Earnings reports suggest airlines are getting back to pre-pandemic levels, with air carriers seeing strong demand for air travel.

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How the major airlines ranked for cancellations in 2022
  • Frontier Airlines – 2.87% of flights canceled.
  • Spirit Airlines – 3% of flights canceled.
  • Southwest Airlines – 3.26% of flights canceled.
  • Allegiant Air – 3.52% of flights canceled.
  • JetBlue Airways – 3.74% of flights canceled.


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American has been weighed down by high debt, operational snafus and industry lagging operating margins. But Kerr forecasts the airline will be converting those headwinds into tailwinds. Indeed, the carrier returned to profitability in the second half of 2022 and has issued guidance for a profitable fourth quarter.

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Fuel costs are one of the largest, most variable airline expenses, representing between 15 and 20 percent of total expenses, according to Airline Financial Data from BTS.

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According to the Wall Street Journal, the average profit per passenger of the seven largest U.S. airlines was $17.75 — for just a one-way flight — and the average profit margin across those seven airlines was 9% in 2017.

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