How Airlines Spend Your Airfare – Yahoo! Finance
The Middle Seat asked US Airways and consulting firm Oliver Wyman to crunch airline expenses down to the percentages that an individual passenger pays, taking a hard look at costs of running an airline. US Airways created a hypothetical flight of 100 passengers. Each one paid the average $146 fare for a domestic flight ($292 round-trip), plus $18 each in fees and add-ons, based on a year’s worth of data ending March 31. The bottom line: There is very little wiggle room on the plane for profit.
Somebody on every flight helps cover crash insurance and compensation paid for bumped passengers or lost luggage. The person beside you on your next trip may be partly paying to repair baggage carts or to buy and maintain passenger oxygen and defibrillators.
“It’s like a wristwatch. You only see the face and hands, but all the parts inside are really necessary,” said former airline chief executive Gordon Bethune. “Those bags don’t get downstairs by themselves. All those things that move bags have to be purchased and then they break. It never stops.”
Fuel now is by far the biggest cost for airlines—greater than even airline salaries. On that 100-passenger US Airways flight, the tickets and fees of 29 people pay just for the fuel to make the trip. Salaries are the second-highest cost, with 20 passengers covering personnel paychecks.
Oliver Wyman’s research pegs fuel costs at an even bigger percentage of costs for the airline industry as a whole. Bigger carriers with longer flights tend to spend a bigger portion of their money at the fuel pump. The industry spent more than 34% of its revenue on fuel—it takes the fares of more than one-third of passengers on a flight, on average, to pay for the gas.
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