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

These airlines suffer from the “race to the bottom”. Competition is fierce so they have to keep their airfare cheap in order to attract customers. Losing profit margin is a lot better than losing revenue. This back and forth continues between airlines until everyone barely makes any money.