It seems pretty elementary to exploit (potential) passengers to break-even right? WRONG! I mean how hard could it be to run an airline?
As much as it is painless to say, running, operating and maintaining an airline is inevitably expensive, even more so if the said airline functions below 80% of (required) seat occupation per flight. However, as mentioned, expenditure in most forms can be inevitable and most of such costs incurred by airlines generally are inescapable. As such, what DO airlines distress as far as costs (operational and otherwise) is concerned?
Factually, about ⅔’s of an airline’s flying costs are supposedly fixed. Amongst the said costs is principally Fuel, and Labour. Rightfully so, as fuel serves as a vital component, and would be categorized necessary regardless of most things including price fluctuations. Labour and Employee costs seconding fuel in that it submits as the second most important form of expenditure as most, if not all measures necessary in running an airline requires even the minimum, or least of all, a workforce! The aforementioned would then serve as the most primary expenditure any airline is bound to confront.
Jet fuel would seem as the most natural and basic “block” required in the venture in question. Thus needless to say that it is rather essential in flight itself. And as much basic as it is, it is subjected to extreme fluctuating tendency, and serves as a circumstance much beyond a given airline’s control. Simply said, a possible “snag” is that Fuel, fixed in its sense of consumption, and varying in its tendency to fluctuate (in price) and eventually other “outcomes”. For instance, SriLankan Airlines renders itself primarily to the expenditure of Aircraft Fuel of a whopping LKR 60,672.78 Million, the most it expends amongst other things, in accordance with the company’s Annual Reports for the year 2018-2019.
In addition to the above, Employee and Labour costs would follow contributing as again, another vital necessity in running, controlling and maintaining the venture and its activities. From first-hand staff as Pilots, Cabin crew workers to other “behind-the-scene” employees such as various engineers, mechanics, entry-level officers, customer service, baggage handling, ground staff and the rest. When all abates, the least of the whole workforce that would continue to function are ones of logistical and maintenance staff and the like. Seconding Fuel, SriLankan Airlines would then expend to “Employee Costs” of LKR 20,368.42 Million, sufficing a sort of reality of running such a venture.
On top of the conventional and stated Fuel and Labour costs, airline and such ventures are likely to incur other various rational expenditure as costs of owning, leasing and renting various aircrafts, renting of terminal space, facilities and gates, landing fees, legal fees, percentages paid to travel agents and agencies, costs sustained to uphold airline websites, one that would increase in importance given the current day and age, with growth (and reliability) of e-commerce and such activities and resources.
On the potential debate owning to the said “costs” would thus bring us to realise the importance of maximum seat occupation of flight in airlines. Costs would naturally be rationed amongst maximum seats available, and priced accordingly. Fluctuations of various costs may render possible changes in the pricing factor. The inability to cater to the highest possible seat occupation (80% to the very least), would simply be rendered as an additional cost to the airline. Even with zero passenger flight, airlines will be bound to confront various expenditure, as it is (and continued to be) in the midst of the happening and current global pandemic. Airlines globally are faced with “bills” despite halts in flight and most activities. This would be since various procedures as maintenance and the like is a factor that the aviation industry should constantly keep up with.
In such sense, it could be implicated that “Soaring the skies and connecting continents” is easier said than done. It takes much more than just a matter of exploitation to run, operate and maintain an airline and SUCCESSFULLY, in that sense! And more often than not, perhaps maximizing efficiency and managing running costs would be prioritized as opposed to achieving large profits.