eli5: How are airline companies profit margins so thin?

Question

Theres like 5 companies in the US that handle ALL the flights. How do they still have thin profit margins despite being the only options?

Edit: spelling

In: 72

Answer 1

They need to be cheap to take business away from the competition, but many costs are fixed: crew wages, plane leases, landing fees at airports. The largest variable is the cost of jet fuel. All you need is a rumor of a war in the middle east or the unexpected shutdown of a refinery and gas prices spike. Airlines try to predict fuel prices and make future contracts to lock in prices.