SOLUTION: TLMT 311 APUS WK 2 The Costs and Expenses in The Airline Industry Essay

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Costs and Expenses in The Airline Industry

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Costs and Expenses in The Airline Industry
Air travel is booming in today’s globalized world, making it possible for people to get
from one place to another in a short period. Billions of profits are generated annually by a
burgeoning industry, the air transportation industry. That makes current air transportation costs
and expenses underrated due to a narrow focus on fluctuating ticket prices. The airline industry
incurs direct operating costs, indirect operating costs, and overhead costs. Oil and fuel costs,
navigation fees, airport fees, insurances, dispatch & handling fees, commissions, flight crew,
lease charges, maintenance charges, and passenger costs of services are some of the direct airline
operating costs. Indirect operating costs in the industry include marketing, depreciation, staff,
interest, and administration costs. In addition, overhead costs include but are not limited to
general management costs, employee costs, and accounting costs. Airlines bear a heavy financial
burden through personnel and fuel expenses. The cost of labor is relatively constant over the
short term. Contrarily, oil prices significantly…