Airline Cost Structure

Airline travel has been a consistently growing sector since its inception in 1909. International Air Transport Association (IATA) statistics reveal that 3.3 billion people flew in 2014, which exceeded the 3 billion mark for the second time. The number of people flying is expected to reach 3.5 billion by 2015, which is about 48% of the world’s population. Air travel has also dramatically grown as a shipping method, with an estimated 50 million tons of cargo transported yearly, representing an annual worth of about $6.4 trillion (or 35% of the worth of goods traded internationally).

The airline industry directly contributes around $746 billion to the global economy according to IATA. Despite the high rate of growth of the industry as a whole, net profit margins remain ...