I know about high fixed & variable costs, but leasing and buying an airplane isn’t cheap either, and entrepreneurs with that much capital and surely great IQ couldn’t turn an airline profitable. How is this possible? there has to be something “internal” or something I’m missing?
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I believe it’s primarily due to the commoditization of flights, thanks to the internet. Websites such as Expedia.com, Priceline.com, and other fare comparison abilities, allows people to search for the lowest cost flight, regardless of carrier so it became a “race to the bottom” in terms of price.
Since the actual transportation became identical between companies, they sought other ways to increase revenue (early boarding, seat selection, WiFi, bag fees, and the like.)
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