Finance and Cost Structure in Airlines

Finance and Cost Structure
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Institutional Affiliate
Finance and Cost Structure
The two economic recessions witnessed in the first decade of the 21st century posed a wide range of challenges to the sustainable growth and development endeavors for industry players across the equally diverse global economic sectors. For instance, key players in air transportation industry such as airlines have faced significant challenges in the effort to regain or maintain profitability in the aftermath of the two recessions. The aftermath of the economic recessions was characteristic of decreasing demand for air travel and subsequent fall in the prices by airlines in the effort to maintain their competitiveness in the market. The decreasing demand for air travel coupled with price reductions by airlines lead to an overall reduction in profitability and revenue generation for airlines as they struggle to balance between the revenue per available seat mile and cost per available seat mile CITATION Rho09 \l 1033 (Rhoades, 2009). Nevertheless, airlines continue to make take strategic measures towards regaining and maintaining profitabil...