Do airlines have high fixed costs?

Question

Do airlines have high fixed costs?

Answer 1

To answer your Q strait YES.

Cost to company in relation to what they charge is small. For eg: a 747 it costs the airline 23c American for every seat to go 1km if 90000 or more pax. If only 30000 pax per year this goes up to 53c.

The cost of a new 747 is between $228m and $300m.

At the end off the day they make money.

Answer 2

Extremely high. That's part of the reason why they traditionally lose money.

Airlines have to buy or lease aircraft to operate and those are very expensive. Even a midsize aircraft like a Boeing 737 costs tens of millions of dollars each.  Large aircraft can cost well over $100 million each.

Those costs don't go away when business slows or competition drives down fares. If an airline has to ground some aircraft, they will save on fuel on crew costs. However, they still have to make payments on the aircraft if they can't sell them.  They also still have to continue making payments on airport facilities.