August is almost over, but there is still time to raise another work-related topic that has received plenty of media attention in recent weeks. In late summer, I tend to glance through airlines’ half-year reports and the analyses written about them.
This year, almost all of them repeat the same message: there are plenty of passengers and aircraft may be full, but profitability declines when costs rise faster than ticket revenue.
From a passenger’s perspective, this may seem strange. If almost every seat has been sold, shouldn’t the flight be good business for the airline?
Not necessarily.
A full aircraft only tells us how many seats are occupied. It does not tell us how much passengers paid for those seats or how much it costs to operate the flight.
An aircraft can be almost full and the flight can still make a loss.
An aircraft costs money even when it is not flying
An aircraft is an enormously expensive tool. It is usually financed through loans or leased under a long-term agreement. The payments continue whether the aircraft is flying or standing at an airport.
There are also insurance, maintenance, spare parts, technical systems and IT systems to pay for. And an airline needs far more people than the crew passengers see on board. Behind every flight are professionals working in areas such as operational planning, engineering, safety, customer service, sales and administration.
Some maintenance is based on flight hours and the number of flights, while some is scheduled according to the calendar. The cost of maintaining an aircraft does not disappear simply because it is not being flown.
An aircraft standing on the ground costs money but earns nothing. This is why airlines do not keep aircraft on the ground without a good reason, even when market conditions are difficult.
Once the aircraft starts moving, the meter runs faster
When a flight is operated, a long list of flight-specific costs is added on top of the fixed costs.
The aircraft needs fuel. At the airport, the airline pays for services including landing, passenger handling, security, parking and ground handling. Baggage is handled, the aircraft is cleaned and any onboard catering is loaded.
Using the airspace is not free either. Airlines pay air navigation and route charges based on factors such as the length of the route and the weight of the aircraft.
A crew is also needed. In addition to salaries, costs arise from training, qualifications and sometimes hotel accommodation and transport.
Every flight hour and landing also wears the aircraft and brings it closer to its next maintenance check or replacement of components. Some of the costs of flying therefore only become visible later.
Fuel is one of the largest costs
Fuel is one of an airline’s largest and most difficult costs to control. Its share varies depending on the price of fuel, the fleet, the routes and the airline’s wider cost structure. On an individual flight, consumption is affected not only by distance but also by the aircraft’s weight, weather, headwinds, routing, congestion and holding.
Fuel is not sold at the same price everywhere. An airline may sometimes take on more fuel at an airport where it is cheaper. However, carrying extra fuel increases the aircraft’s weight and therefore its fuel consumption.
Airlines hedge some of their fuel purchases against price fluctuations. Hedging can soften the impact of a sudden price increase, but it does not remove the risk entirely.
The tickets may have been sold months earlier
Air transport is planned over a long time horizon. Routes and schedules are built months in advance, and ticket sales may begin around a year before the flight.
The airline therefore has to estimate future demand and costs at a time when not everything can yet be known.
An airline cannot ask for more money afterwards for a summer holiday ticket bought during the winter, even if fuel prices, airport charges or other costs have risen significantly in the meantime.
A full aircraft may therefore carry many passengers whose tickets were sold too cheaply in relation to the actual cost of operating the flight. The aircraft is full, but the revenue is not enough to cover everything.
An airline must therefore predict not only how many people want to travel but also how much they are willing to pay for their tickets.
Why not simply cancel an expensive flight?
If the cost of operating a flight looks high, it may seem sensible to leave the aircraft on the ground. The decision is not that simple.
A large share of the costs will continue anyway. Aircraft financing, insurance, systems and a significant share of staff costs do not disappear when one flight is cancelled.
If ticket revenue covers the additional costs directly caused by operating the flight and contributes something towards the fixed costs as well, it may still make sense to operate the flight even if its financial result is weak.
The cancellation of a single flight affects passengers on two flights: those due to depart from the origin and those waiting for the return flight at the destination. If the aircraft remains at the origin, it never reaches the destination to operate the return sector. Passengers may therefore need to be rebooked, accommodated or transported by another route at both ends of the flight.
A flight is not an isolated event. It is one piece in the puzzle of the day’s operations and the entire route network.
If a route consistently loses more money by being operated than by keeping the aircraft on the ground or using it elsewhere, frequencies will be reduced or the route will be discontinued. The airline will try to move the aircraft to a market where it is expected to generate a better return.
The cost of disruption does not end with the cancelled flight
Weather, a technical fault, an airspace closure or industrial action can stop a flight, but the costs do not stop there.
Passengers must be moved to other flights, accommodated or transported by another route. The aircraft and crew may be left in the wrong place, which means that the schedules and crew duties for following flights also have to be rearranged.
One cancellation can spread much further across the network than a passenger can see from their own departure gate. The consequences may take several days to resolve. At the same time, the airline may lose customer trust and future bookings.
The airline does not keep the full ticket price
The total price paid by the passenger is not the same as the revenue the airline keeps.
The price includes various taxes as well as airport and passenger charges that the airline passes on. The remaining amount has to cover the flight’s direct costs and a share of the airline’s fixed costs.
For low-cost airlines in particular, revenue from baggage, seat selection, onboard catering and other services is an important part of profitability.
This is why two passengers sitting next to each other may have paid completely different prices for the same flight. One bought a promotional ticket months earlier and is travelling with a small bag. The other booked the day before departure and also paid for baggage, a seat and other services.
In the load factor, both count as one passenger. Financially, their contribution to the flight may be very different.
A difficult business with a thin margin
Airlines may generate enormous revenues, but their final profit margins are often very small. In June 2026, IATA estimated that the combined net profit margin of the world’s airlines would be around two per cent this year. In practice, if the forecast proves correct, only about two euros of every hundred euros in revenue would remain as profit.
A small change in fuel prices, salaries, maintenance costs or average ticket prices can quickly consume that margin.
This is why route decisions are not based only on whether there are enough passengers in a region to fill the aircraft. The important question is whether the seats can be sold at a price that allows the route to withstand cost fluctuations and ordinary operational disruptions.
A full aircraft is a good start, but not the whole story
From the perspective of regional air connectivity development, this is important to understand. A high load factor is a good thing, but on its own it does not guarantee the future of a route.
In addition to passenger numbers, an airline considers average ticket prices, ancillary revenue, the share of business travel, fluctuations in demand and whether the same aircraft could generate a better return on another route.
This is why the market has to be developed before a new connection appears in the timetable. Business travel needs, tourism, events, onward connections, the airport’s cost level and functioning travel chains all form part of the overall picture an airline uses to assess the attractiveness of a region.
To a passenger, a full aircraft looks like a success. For the airline, it only becomes a success when the revenue from the flight covers the fuel, aircraft, crew, maintenance, airport and airspace charges, as well as all the background costs that passengers never see.
Flying is expensive, complicated and sensitive to change. That is exactly why it is such a difficult, but also such an interesting, business.
Note: This article was originally written in Finnish and translated into English with the assistance of AI. The English version has been reviewed and edited by the author.