Why are airlines sinking? Analysis and Causes

Why are airlines sinking?

The airline industry is known as one of the most challenging sectors in the world for reasons such as high start-up costs, complex operational requirements and variable demand. So, why do many airlines fail and why do they have such a hard time maintaining their business?

High Operational Costs and Profit Margin Pressure

Airlines need huge budgets in terms of fixed and variable costs. Operating costs, maintenance and renewal of the aircraft fleet, combined with high fuel costs, airport fees and personnel expenses, reduce profit rates. Economic crises around the world, rising oil prices and changes in exchange rates can put extra pressure on profit margins

Low Demand and Competition

Decreased demand in air transport directly affects the revenues of airlines. Factors such as economic recessions, political instabilities or global health crises can negatively alter people's travel habits. In addition, low-cost carriers and the intensity of current competition force companies to further reduce margins in order to maintain market share.

Management Errors and Strategic Decisions

One of the reasons behind the sinking of an airline is management errors. Strategic planning deficiencies, wrong investment decisions, ineffective cost management and incorrect analysis of target markets can lead to the sinking of the company in the long run. In addition, an approach that does not care about customer satisfaction and airline safety can lead to a loss of reputation and a decrease in the number of passengers.

Regulations and Politics

Airlines are subject to many different regulations at the international level. These regulations place a great burden on companies in terms of safety, environmental and operational standards. In addition, interstate political relations or political entanglements can restrict access to certain markets, thereby damaging the operations and income situation of airlines.