10 Reasons Why Airline Industry is Unique
When asked how to become a Millionaire, Richard Branson said, “You start off as a Billionaire and then open an Airline.” How funny! And how true! Airline industry has always been very different from other industries, in all markets and in all times. Here I would list and analyze 10 reasons which I think make the Airline industry so unique (and loss making; to justify the wisdom in Richard Branson’s statement). 1) A capital intensive industry with high fixed costs: A business is considered capital intensive depending on the ratio of capital required to the amount of labor. The airline industry is considered among the top of the high capital intensive industries. Airline industry also has high fixed costs as compared to revenues. This puts the industry to higher risk because in case it is not able to attain an economy of scale or if there is a downturn in sales, the high fixed cost can’t be covered and the business becomes unprofitable. Such a condition to some extent...