Navigating Turbulence: Airlines Struggle with Profit Margins

Airlines, as price takers, lack influence over pricing due to limited suppliers and a competitive market, according to IATA Chief Economist Marie Owens Thomsen. Rising operational costs and low profit margins challenge airlines' financial stability. Although airfare has risen slower than consumer prices, transparency and revenue diversification remain critical issues.

Airlines globally continue to grapple with narrow profit margins and financial instability, the International Air Transport Association's Chief Economist Marie Owens Thomsen highlighted in a recent interview. Positioned as price takers, the carriers have limited say over the costs they incur.

In countries like India, where aviation demand is surging, concerns over air ticket affordability and pricing strategies persist. Thomsen pointed out that airlines are often caught between high operating expenses and a hyper-competitive market that erodes their pricing power.

Despite airfares rising at a slower pace than consumer prices over the past decade, the financial pressures remain significant given the substantial impact of jet fuel costs. Thomsen urges for greater revenue diversification and clarity in pricing to ensure industry sustainability.

(With inputs from agencies.)