How Much Money Does an Airline Make Per Passenger?

The revenue an airline generates per passenger can vary significantly based on several factors, including the airline's business model (full-service vs. low-cost), the route, and the class of service. As of 2023, a general estimate for airlines can be:

Revenue Breakdown

Full-service Carriers

These airlines might earn between $200 to $300 per passenger on domestic flights, which includes ticket sales, baggage fees, and other ancillary revenues.

Low-cost Carriers

They often generate around $100 to $200 per passenger, relying heavily on ancillary fees for services like baggage and seat selection.

These figures can fluctuate based on demand, seasonality, and operational costs. Additionally, international flights usually yield higher revenues per passenger due to longer distances and higher ticket prices.

Real-Life Example: An Unexpected Insight

While working as a pilot aboard a low-cost carrier from Spain to an alleged London airport (pre-9/11), I once sat in the jump seat between the two pilots for the last 30 minutes of a flight. One of the intriguing observations was the economics of running the aircraft's Alternating Power Unit (APU).

We taxied to the stand and executed the shutdown checks. The pilot ensured the aircraft was connected to ground power, then switched the APU off. I inquired about the reason, as the plane would remain on the ground for 40 minutes before the next flight. Switching the APU off instead of relying on ground power costs $36 per hour, while ground power costs only $16 per hour. That difference could represent profit or loss for the flight, considering the aircraft itself could cost over $100 million.

The economics of aviation are a riddle, a mystery, and an enigma, as highlighted in the example above. This showcases the intricate balance of cost and revenue for each flight.

Revenue Streams and Costs

First, it is important to note that airlines have various revenue streams and cost drivers. So the answer may vary depending on whether you are looking at average profit, marginal profit, and which expenses you include.

Consider the example of a large American carrier in a specific year where they earned more money through renewing their credit card agreement and selling miles to banks for credit card holders than they did from flying planes! This example underscores that when airlines generate significant profits through ancillary revenues, the primary flight operations may not be as profitable.

A specific case: Delta Airlines in 2019

Delta in 2019 was on the verge of profitability, having generated a pre-tax income of $6.2 billion with 204 million customers. This translates to an average of $30 per passenger. If we exclude ancillary revenues such as the Amex deal, Maintenance, Repairs, and Overhauls (MRO) services, cargo, and other ancillary services, the profit is even lower.

This demonstrates that when passengers wonder why flights are so expensive, it's not entirely due to profit. It also explains why a single weather-related delay can significantly impact a passenger's experience, as airlines may not make a profit per passenger at lower rates.

For instance, at $30 in profit, if Delta lost just one passenger per flight, they would lose money. This highlights the importance of maintaining a high occupancy rate.

Types of Passengers and Their Value

It's crucial to consider the different types of passengers. Infrequent travelers who purchase basic economy tickets may not be profitable at all! Conversely, business customers who travel regularly on last-minute, premium-class tickets can generate hundreds of thousands in revenue per year.

To achieve top-tier status with one of the major U.S. airlines, a customer needs to fly over 100,000 miles per year and spend between $8,500 and $15,000. However, this is the minimum. Many people can achieve 50,000 to 100,000 miles per year, and some even fly 500,000 to 1,000,000 miles with one airline.

On some routes, such as New York to London, half the plane can be full of these high-value passengers. Therefore, business travelers and those who achieve high status with airlines are incredibly valuable in terms of revenue. They often board first and may even get an upgrade, as they represent the backbone of the airline's ancillary revenue streams.