Why are flights so expensive? Well, the answer is fairly simple. The cost of operating flights is very high for airlines. Many details have to be considered before an airline arrives at the price of your ticket.
The airline has to consider lots of varied business-factors on top of the operating cost. It also needs to try to ensure a good profit margin after all the varied details are structured into the ticket’s price-formula.
Here is the cost of operating a flight. Each cost-category is expressed in a percentage of the total expenses a typical airline has for that flight. We’ll start by looking at the least amount of expenses associated with operating a flight, to the highest expenses. However, the cost and percentages can vary based on how each individual airline’s operating structure has been set up.
No airline is alike
Operating structures vary from airline to airline. For example, the way a budget carrier like Norwegian Air operates is completely different from a legacy carrier’s operating methods, such as that of i.e. American Airlines. This, in turn, affects how the airline arrives at the price of the tickets.
Airline Operating Expenses
1. Advertising & Administrative Expenses: 5%
The least amount of money an airline spends on flights is the cost of advertising and expenses associated with administrative cost. The money spent on this includes the cost of marketing, promotion, taxes, and miscellaneous expenses.
2. Depreciation & Leasing Expenses: 8%
Depreciation expenses have to do with accounting principles. Airplanes, like cars, depreciate in value over time, as the planes get older. Some airlines have leased airplanes in their fleet, which of course, would mean certain accounting principles. Purchased airplanes would mean further accounting principles.
3. Air Navigation, Landing Fees & Metrological Support Fees: 9%
The Air Traffic Control system and the metrological support network is a complex network of operators and equipment across the entire world. Each airline has to help pay for this system.
Furthermore, every time your airplane lands at an airport your airline has to pay that airport a landing fee.
4. Salaries: 10%
You would think that perhaps the crew salaries would take a big chunk out of the cost of your ticket, but that is not the case. Only 10% of the airline’s salary expense goes to paying your crews (i.e. pilots and flight attendants).
5. Airplane Service Expenses: 16%
Any cost associated with your airplane goes under the expenses paid from things such as insurance, maintenance cost, painting, and other airplane-related upkeep expenses.
6. Passenger & Luggage Services Expenses: 26%
Passenger services cost include inflight expenses, such as drinks, food, amenity kits, pillows, and blankets. It also includes customer service costs, website expenses, and call center operational expenses.
Luggage services cost include expenses associated with baggage handling, transporting, loading, and unloading.
7. Jet Fuel cost: 26%
The operating cost for gas on an airplane fluctuates with the price of gas. Therefore, fuel is the most volatile factor affecting how much your ticket price is. The price of jet fuel varies just like it does with the car gas every time you go to the pump.
How much fuel an airplane uses on one flight depends on many factors. The airplane type, route, the speed, winds, and altitude of flight, and the length of the flight are things coming into play.
As an example, a typical flight from Los Angeles to Paris can easily cost the airline $45,000 in fuel.