You’d think airlines make a profit, but no. You see, airlines aren’t really in the business of ferrying people around, that’s just a necessary side hussle. They’re banks.
A few reasonably well known airlines
The airline business model is they ferry people around and if they turn up with what we call a “positive zero” around here, meaning the bottom line that looks like a bill for a bubble gum at a convenience store, they call it a successful year. They often don’t get that far, but it’s not a problem. For an airline, that’s just the inconvenient cost of doing business.
Their real income cash cow are loans. Airlines sit on piles upon piles of money that they turn and churn in the world financial markets. If you’re in the need of a big loan, odds are airlines have the money you need. Just sign at the bottom and they expect the delivery of your firstborn later that day.
Airlines are in the business of finance and their operating capital comes from you paying your tickets months in advance. That’s their business model, sell seat tickets well in advance and loan out the money in the meantime. With a sufficiently large volume of sales you’ll always have a huge amount of cash in a bank and that can be turned into enormous profits on financial market. The passenger is just the inconvenience they have to deal with on the side.
Now you understand why airlines sell deeply discounted tickets well in advance and also why they bother with the economy class at all. Economy class barely covers its own operating costs, but sells most tickets several months in advance, which gives the company the capital for their financial shenanigans. Business class makes money by itself and first class is again barely profitable but gets them the connections in business and finance they need to make a profit in their real business.
Funny, eh? That’s why USA doesn’t have a national high speed rail system. The finance system needs their airlines nice and plump to work with.
