Fuel - Major Headache for Airline Profits - Charter Flight Group

Fuel – Major Headache for Airline Profits

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Fuel – Major Headache for Airline Profits

 

There are several reasons why most of the major airlines filed bankruptcy during the past ten years. But the biggest reason wasn’t the recession at the

English: Chart of jet fuel prices for major US...
English: Chart of jet fuel prices for major US airlines. (Photo credit: Wikipedia)

end of 2010 or even the 9-11-01 terrorist hijackings. It was the rising cost of fuel, which has drained literally billions of dollars away from the airline’s bottom lines.

Rising fuel expenses have not only cut airline’s profit margins, it is also blamed for the slash in labor for the airlines as well. Many airlines report that their fuel expenses are now a larger part of their budgets than the labor costs. Airlines have been trying to find ways to cut costs, and improve efficiency. Fuel is one of the “uncontrollable” expenses and  since little can be done to lower fuel costs, labor is one of the first expenses to be cut. That is an unfortunate cost of doing business for the airlines.

Another expense that can be cut is the “marginally profitable” airports. Airlines have tried to consolidate many of their flights to their main hubs, and the smaller airports have suffered a drop off of flights, which in turn has caused an increase in travel fares at these smaller airports.

One last expense that the airlines have had to invest in is newer, more economical planes. The average cost of one new 747 jet is roughly 357 million dollars. A 737 jet averages around 100 million dollars. It doe not take much to see why airlines are having to cut costs where ever they can, or to raise prices where they have. It is fortunate for the traveler that prices for airfare have only risen about 9 percent over the last decade, as opposed to the 33+ percent raise in fuel prices.

Indeed, as fuel prices have increased, no aircraft company is immune. Even in the charter flight business, fuel costs have contributed to increases but here at Charter Flight Group, you can rest assured that we will do our best to locate the best private aircraft with the best rates possible. We strive to accomplish a balance between costs and comfort and guarantee that we will always do our best to locate only the best for you. Give us a call today to see what our expert Charter planners can accomplish.

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