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

If there’s more than one company, and they’re not colluding, they will compete. The second any one of them tries to charge more to get more profit, the other one will steal all their business.

Airline seats are, almost universally, commodities…people will buy almost exclusively on price because the “product” is basically the same. Under those conditions, with competition, you expect profit margins to approach zero.