The Economics of Discount Airlines

Photo: The-Lane-Team

Operating an airline is both capital- and labor-intensive. The airplanes, maintenance, fuel, regulatory fees, pilots, crew, agents, baggage handlers and other key components of airline operations aren't cheap.

With such high expenses, airlines typically earn profit margins of just 1 to 2%. Keeping costs down is essential to maintaining those profits and staying afloat in a bankruptcy-ridden industry.

Learn how discount airlines are able to make a profit while charging airfares consumers can afford in my Financial Edge article for Investopedia, The Economics of Discount Airlines.