Here’s The Startling Amount Airlines Are Actually Making Off Your Ticket
Do you know how much of your airfare actually goes to the airline? The answer will almost definitely shock you.
When you’re asked to drop a few hundred dollars on a flight, you might be forgiven for thinking that airlines are making a mint on your fare. But in most cases, you’d be sorely mistaken.
The average profit for an airline on a one-way fare is a mere $17.75, according to recent research by the Wall Street Journal. That’s right – your $250 ticket is making the airline about enough money to cover lunch in an airport restaurant. And not even a fancy one.
The average profit margin for airlines is just 9 percent. Suddenly all those baggage fees make sense. In fact, the cost of the actual ticket is usually just enough to cover fuel costs.
Airlines make the most money on baggage fees and extras like seat selection charges, flight change fees and on-board purchases.
High fuel costs and taxes are the culprit behind these shocking numbers. Carriers have to strike a delicate balance between keeping fares low enough to entice customers while also ensuring they turn some sort of profit.
The U.S. airline with the highest profit margin is Southwest at 16.5 percent. Curiously, they don’t charge for checked baggage.