ABSTRACT
High-cost airlines such as Lufthansa, Air France or All Nippon Airways have unit costs more than twice as high as the lowest-cost network or legacy airlines in their region of the world. Before assessing the factors that directly impact on the costs of supplying airline services, it is important to appreciate that demand too impacts on unit costs. It is generally understood and accepted that airline costs have a direct impact on the demand for air services since they influence the prices at which those services are sold. The interplay of crude oil prices and oil company refining and transportation costs, as well as their pricing strategies, broadly determine the posted fuel prices at airports around the world. The level of airport charges will depend partly on the costs of the airports themselves and partly on whether the airport authority or the government is trying to fully recover those costs or even make a profit.
