Commercial airlines have low profit margins, with the industry average at a meager 2.6%.
The capital-intensive nature of the industry, extensive competition, and fluctuating demand contribute to these low margins.
Airlines are heavily impacted by the price of jet fuel and changes in global travel demand, requiring them to hedge their assets and be prepared for potential losses.
Commercial aviation is an industry with notoriously low profit margins, a fact that has famously pushed many investors, such as Berkshire Hathaway's Warren Buffett, away from investing in airlines. As any economist or financial accountant will tell you, the profit margin represents the percentage difference between the profit a firm is able to generate and the costs incurred to create these earnings.