ABSTRACT
A state or a private owner may well decide to support its airline by compensating losses that the airline generates, but due to the cost of aviation today, this is difficult to maintain in the long run. Airlines need to make profits in order to survive; a consistently non-profitable airline will go bankrupt. The way in which airlines operate is defined by economics; the author needs to understand the basics of airline economics in order to understand the way airlines operate. Airlines look at the load factor on a per flight basis, a key performance indicator (KPI) relevant for commercial- and capacity planning. An individual flight should preferably reach its break-even load factor – the percentage of the capacity sold at which all costs for the flight are covered. Airlines often publish their average revenue per passenger. This is indeed an interesting KPI that tells the airline how much on average a passenger spends with that airline.
