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

Strangely enough one reason is the airlines aren’t in the travel business.

They are now perks attached to credit card companies. The airlines job is to not lose money. The profits are through the credit cards that offer airlines miles, hotels, travel experiences etc etc.

Something like 2/3 of the value of the airlines isn’t on the planes and flights but in the finance services.

So this let’s them race to the bottom in price due to competition and still survive, even thrive.

Edit: Some sources! [https://www.youtube.com/watch?v=ggUduBmvQ_4](https://www.youtube.com/watch?v=ggUduBmvQ_4)

[https://www.marketplace.org/2019/04/03/are-airlines-making-more-money-credit-cards-flying/](https://www.marketplace.org/2019/04/03/are-airlines-making-more-money-credit-cards-flying/)

[https://www.bloomberg.com/news/articles/2017-03-31/airlines-make-more-money-selling-miles-than-seats](https://www.bloomberg.com/news/articles/2017-03-31/airlines-make-more-money-selling-miles-than-seats)