An airline is a company that provides air transport services for
traveling passengers and freight. Airlines utilize aircraft to supply
these services and may form partnerships or alliances with other
airlines for codeshare agreements. Generally, airline companies are
recognized with an air operating certificate or license issued by a
governmental aviation body.
Airlines vary in size, from small domestic airlines to full-service
Airline services can be categorized as being
intercontinental, domestic, regional, or international, and may be
operated as scheduled services or charters. The largest airline
American Airlines Group.
1.1 The first airlines
1.2 European airline industry
1.2.3 Global expansion
1.2.4 EU airline deregulation
1.3 U.S. airline industry
1.3.1 Early development
1.3.2 Development since 1945
1.3.3 US airline deregulation
1.3.4 The airline industry bailout
1.4 Asian airline industry
1.5 Latin American and Caribbean airline industry
2 Regulatory considerations
3 Economic considerations
3.1 Largest airlines
3.2 Ticket revenue
3.3 Operating costs
3.4 Assets and financing
4 Environmental impacts
5 Call signs
7 Industry trends
8 See also
Airline related lists
9 Notes and references
11 External links
The first airlines
DELAG, Deutsche Luftschiffahrts-Aktiengesellschaft was the world's
first airline. It was founded on November 16, 1909, with government
assistance, and operated airships manufactured by The Zeppelin
Corporation. Its headquarters were in Frankfurt. The first fixed wing
scheduled air service was started on January 1, 1914, from St.
Petersburg, Florida, to Tampa, Florida. The four oldest
non-dirigible airlines that still exist are Netherlands' KLM
Avianca (1919), Australia's
and the Czech Republic's
Czech Airlines (1923).
European airline industry
The Handley Page W.8b was used by Handley Page Transport, an early
British airline established in 1919.
The earliest fixed wing airline in Europe was
Aircraft Transport and
Travel, formed by
George Holt Thomas in 1916; via a series of
takeovers and mergers, this company is an ancestor of modern-day
British Airways. Using a fleet of former military Airco DH.4A biplanes
that had been modified to carry two passengers in the fuselage, it
operated relief flights between
Folkestone and Ghent. On 15 July 1919,
the company flew a proving flight across the English Channel, despite
a lack of support from the British government. Flown by Lt. H Shaw in
Airco DH.9 between
RAF Hendon and
Paris – Le Bourget Airport, the
flight took 2 hours and 30 minutes at £21 per passenger.
On 25 August 1919, the company used DH.16s to pioneer a regular
Hounslow Heath Aerodrome
Hounslow Heath Aerodrome to Le Bourget, the first regular
international service in the world. The airline soon gained a
reputation for reliability, despite problems with bad weather, and
began to attract European competition. In November 1919, it won the
first British civil airmail contract. Six
Royal Air Force
Royal Air Force Airco DH.9A
aircraft were lent to the company, to operate the airmail service
Hawkinge and Cologne. In 1920, they were returned to the Royal
Other British competitors were quick to follow – Handley Page
Transport was established in 1919 and used the company's converted
wartime Type O/400 bombers with a capacity for 12 passengers, to
run a London-
Paris passenger service.
The first French airline was Société des lignes Latécoère, later
known as Aéropostale, which started its first service in late 1918 to
Société Générale des Transports Aériens was created in
late 1919, by the
Farman brothers and the
Farman F.60 Goliath plane
flew scheduled services from
Toussus-le-Noble to Kenley, near Croydon,
England. Another early French airline was the Compagnie des
Messageries Aériennes, established in 1919 by Louis-Charles Breguet,
offering a mail and freight service between Le Bourget Airport, Paris
and Lesquin Airport, Lille.
Junkers F.13 D-190 of
The first German airline to use heavier than air aircraft was Deutsche
Luft-Reederei established in 1917 which started operating in February
1919. In its first year, the D.L.R. operated regularly scheduled
flights on routes with a combined length of nearly 1000 miles. By 1921
the D.L.R. network was more than 3000 km (1865 miles) long, and
included destinations in the Netherlands, Scandinavia and the Baltic
Republics. Another important German airline was
which began operations in 1921. It was a division of the aircraft
manufacturer Junkers, which became a separate company in 1924. It
operated joint-venture airlines in Austria, Denmark, Estonia, Finland,
Hungary, Latvia, Norway, Poland, Sweden and Switzerland.
A 1919 advertisement for the Dutch airline KLM
The Dutch airline
KLM made its first flight in 1920, and is the oldest
continuously operating airline in the world. Established by aviator
Albert Plesman, it was immediately awarded a "Royal" predicate
from Queen Wilhelmina. Its first flight was from
London to Amsterdam, using a leased
Aircraft Transport and Travel
DH-16, and carrying two British journalists and a number of
newspapers. In 1921,
KLM started scheduled services.
In Finland, the charter establishing Aero O/Y (now Finnair) was signed
in the city of
Helsinki on September 12, 1923.
Junkers F.13 D-335
became the first aircraft of the company, when Aero took delivery of
it on March 14, 1924. The first flight was between
Tallinn, capital of Estonia, and it took place on March 20, 1924, one
In the Soviet Union, the Chief Administration of the Civil Air Fleet
was established in 1921. One of its first acts was to help found
Deutsch-Russische Luftverkehrs A.G. (Deruluft), a German-Russian joint
venture to provide air transport from Russia to the West. Domestic air
service began around the same time, when Dobrolyot started operations
on 15 July 1923 between
Moscow and Nizhni Novgorod. Since 1932 all
operations had been carried under the name Aeroflot.
Early European airlines tended to favor comfort – the passenger
cabins were often spacious with luxurious interiors – over speed and
efficiency. The relatively basic navigational capabilities of pilots
at the time also meant that delays due to the weather were
Imperial Airways Empire Terminal, Victoria, London. Trains ran
from here to flying boats in Southampton, and to
By the early 1920s, small airlines were struggling to compete, and
there was a movement towards increased rationalization and
consolidation. In 1924,
Imperial Airways was formed from the merger of
Instone Air Line
Instone Air Line Company, British Marine Air Navigation, Daimler
Handley Page Transport Co Ltd., to allow British airlines
to compete with stiff competition from French and German airlines that
were enjoying heavy government subsidies. The airline was a pioneer in
surveying and opening up air routes across the world to serve
far-flung parts of the
British Empire and to enhance trade and
The first new airliner ordered by Imperial Airways, was the Handley
Page W8f City of Washington, delivered on 3 November 1924. In the
first year of operation the company carried 11,395 passengers and
212,380 letters. In April 1925, the film The Lost World became the
first film to be screened for passengers on a scheduled airliner
flight when it was shown on the London-
Two French airlines also merged to form
Air Union on 1 January 1923.
This later merged with four other French airlines to become Air
France, the country's flagship carrier to this day, on 7 October 1933.
Deutsche Luft Hansa
Deutsche Luft Hansa was created in 1926 by merger of two
airlines, one of them
Junkers Luftverkehr. Luft Hansa, due to the
Junkers heritage and unlike most other airlines at the time, became a
major investor in airlines outside of Europe, providing capital to
Varig and Avianca. German airliners built by Junkers, Dornier, and
Fokker were among the most advanced in the world at the time.
Alan Cobham surveyed a flight route from the UK to Cape Town,
South Africa, following this up with another proving flight to
Melbourne, Australia. Other routes to
British India and the Far East
were also charted and demonstrated at this time. Regular services to
Basra began in 1927 and were extended to
Karachi in 1929.
Australia service was inaugurated in 1932 with the Handley
Page HP 42 airliners. Further services were opened up to Calcutta,
Hong Kong passengers departed London
on 14 March 1936 following the establishment of a branch from Penang
to Hong Kong.
April 1935 map showing Imperial Airways' routes from the UK to
Australia and South Africa
Imperial's aircraft were small, most seating fewer than twenty
passengers, and catered for the rich. Only about 50,000 passengers
Imperial Airways in the 1930s. Most passengers on
intercontinental routes or on services within and between British
colonies were men doing colonial administration, business or
Like Imperial Airways,
Air France and KLM's early growth depended
heavily on the needs to service links with far-flung colonial
possessions (North Africa and Indochina for the French and the East
Indies for the Dutch). France began an air mail service to
1919 that was bought out in 1927, renamed Aéropostale, and injected
with capital to become a major international carrier. In 1933,
Aéropostale went bankrupt, was nationalized and merged into Air
Germany lacked colonies, it also began expanding its services
globally. In 1931, the airship Graf
Zeppelin began offering regular
scheduled passenger service between
Germany and South America, usually
every two weeks, which continued until 1937. In 1936, the airship
Hindenburg entered passenger service and successfully crossed the
Atlantic 36 times before crashing at Lakehurst, New Jersey, on May 6,
From February 1934 until
World War II
World War II began in 1939 Deutsche Lufthansa
operated an airmail service from Stuttgart,
Germany via Spain, the
Canary Islands and West Africa to Natal in Brazil. This was the first
time an airline flew across an ocean.
By the end of the 1930s
Aeroflot had become the world's largest
airline, employing more than 4,000 pilots and 60,000 other service
personnel and operating around 3,000 aircraft (of which 75% were
considered obsolete by its own standards). During the Soviet era
Aeroflot was synonymous with Russian civil aviation, as it was the
only air carrier. It became the first airline in the world to operate
sustained regular jet services on 15 September 1956 with the Tupolev
EU airline deregulation
Deregulation of the
European Union airspace in the early 1990s has had
substantial effect on the structure of the industry there. The shift
towards 'budget' airlines on shorter routes has been significant.
Airlines such as
Ryanair have often grown at the expense
of the traditional national airlines.
There has also been a trend for these national airlines themselves to
be privatized such as has occurred for
Aer Lingus and British Airways.
Other national airlines, including Italy's Alitalia, have suffered –
particularly with the rapid increase of oil prices in early 2008.
U.S. airline industry
Main article: Air transportation in the United States
Douglas DC-3 in 1940. The DC-3, often regarded as one of the most
influential aircraft in the history of commercial aviation,
revolutionized air travel.
Tony Jannus conducted the United States' first scheduled commercial
airline flight on 1 January 1914 for the St. Petersburg-Tampa Airboat
Line. The 23-minute flight traveled between St. Petersburg,
Florida and Tampa, Florida, passing some 50 feet (15 m) above
Tampa Bay in Jannus'
Benoist XIV wood and muslin biplane flying boat.
His passenger was a former mayor of St. Petersburg, who paid $400 for
the privilege of sitting on a wooden bench in the open cockpit. The
Airboat line operated for about four months, carrying more than 1,200
passengers who paid $5 each.
Chalk's International Airlines
Chalk's International Airlines began
service between Miami and Bimini in the
Bahamas in February 1919.
Based in Ft. Lauderdale, Chalk's claimed to be the oldest continuously
operating airline in the United States until its closure in 2008.
Following World War I, the United States found itself swamped with
aviators. Many decided to take their war-surplus aircraft on
barnstorming campaigns, performing aerobatic maneuvers to woo crowds.
In 1918, the
United States Postal Service
United States Postal Service won the financial backing of
Congress to begin experimenting with air mail service, initially using
Curtiss Jenny aircraft that had been procured by the United States
Army Air Service. Private operators were the first to fly the mail but
due to numerous accidents the US Army was tasked with mail delivery.
During the Army's involvement they proved to be too unreliable and
lost their air mail duties. By the mid-1920s, the Postal Service
had developed its own air mail network, based on a transcontinental
New York City
New York City and San Francisco. To supplement
this service, they offered twelve contracts for spur routes to
independent bidders. Some of the carriers that won these routes would,
through time and mergers, evolve into Pan Am, Delta Air Lines, Braniff
Airways, American Airlines,
United Airlines (originally a division of
Boeing), Trans World Airlines, Northwest Airlines, and Eastern Air
Service during the early 1920s was sporadic: most airlines at the time
were focused on carrying bags of mail. In 1925, however, the Ford
Motor Company bought out the Stout
Aircraft Company and began
construction of the all-metal Ford Trimotor, which became the first
successful American airliner. With a 12-passenger capacity, the
Trimotor made passenger service potentially profitable. Air
service was seen as a supplement to rail service in the American
At the same time,
Juan Trippe began a crusade to create an air network
that would link America to the world, and he achieved this goal
through his airline, Pan American World Airways, with a fleet of
flying boats that linked
Los Angeles to
Boston to London.
Pan Am and Northwest Airways (which began flights to Canada in the
1920s) were the only U.S. airlines to go international before the
With the introduction of the
Boeing 247 and
Douglas DC-3 in the 1930s,
the U.S. airline industry was generally profitable, even during the
Great Depression. This trend continued until the beginning of World
Development since 1945
In October 1945, the
American Export Airlines
American Export Airlines became the first airline
to offer regular commercial flights between North America and
Europe. Shown here is Am Ex
Boeing 377 Stratocruiser in 1949.
World War II, like World War I, brought new life to the airline
industry. Many airlines in the Allied countries were flush from lease
contracts to the military, and foresaw a future explosive demand for
civil air transport, for both passengers and cargo. They were eager to
invest in the newly emerging flagships of air travel such as the
Boeing Stratocruiser, Lockheed Constellation, and Douglas DC-6. Most
of these new aircraft were based on American bombers such as the B-29,
which had spearheaded research into new technologies such as
pressurization. Most offered increased efficiency from both added
speed and greater payload.
In the 1950s, the De Havilland Comet,
Boeing 707, Douglas DC-8, and
Sud Aviation Caravelle
Sud Aviation Caravelle became the first flagships of the Jet Age in
the West, while the Eastern bloc had
Tupolev Tu-104 and Tupolev Tu-124
in the fleets of state-owned carriers such as Czechoslovak ČSA,
Aeroflot and East-German Interflug. The
Vickers Viscount and
Lockheed L-188 Electra
Lockheed L-188 Electra inaugurated turboprop transport.
The next big boost for the airlines would come in the 1970s, when the
Boeing 747, McDonnell Douglas DC-10, and
Lockheed L-1011 inaugurated
widebody ("jumbo jet") service, which is still the standard in
international travel. The
Tupolev Tu-144 and its Western
counterpart, Concorde, made supersonic travel a reality. Concorde
first flew in 1969 and operated through 2003. In 1972,
producing Europe's most commercially successful line of airliners to
date. The added efficiencies for these aircraft were often not in
speed, but in passenger capacity, payload, and range.
features modern electronic cockpits that were common across their
aircraft to enable pilots to fly multiple models with minimal
US airline deregulation
Boeing 747 Clipper Neptune's Car in 1985. The deregulation of
the American airline industry increased the financial troubles of the
airline which ultimately filed for bankruptcy in December 1991.
The 1978 U.S. airline industry deregulation lowered federally
controlled barriers for new airlines just as a downturn in the
nation's economy occurred. New start-ups entered during the downturn,
during which time they found aircraft and funding, contracted hangar
and maintenance services, trained new employees, and recruited laid
off staff from other airlines.
Major airlines dominated their routes through aggressive pricing and
additional capacity offerings, often swamping new start-ups. In the
place of high barriers to entry imposed by regulation, the major
airlines implemented an equally high barrier called loss leader
pricing. In this strategy an already established and dominant
airline stomps out its competition by lowering airfares on specific
routes, below the cost of operating on it, choking out any chance a
start-up airline may have. The industry side effect is an overall drop
in revenue and service quality. Since deregulation in 1978 the
average domestic ticket price has dropped by 40%. So has airline
employee pay. By incurring massive losses, the airlines of the USA now
rely upon a scourge of cyclical
Chapter 11 bankruptcy proceedings to
continue doing business.
America West Airlines
America West Airlines (which has since
merged with US Airways) remained a significant survivor from this new
entrant era, as dozens, even hundreds, have gone under.
In many ways, the biggest winner in the deregulated environment was
the air passenger. Although not exclusively attributable to
deregulation, indeed the U.S. witnessed an explosive growth in demand
for air travel. Many millions who had never or rarely flown before
became regular fliers, even joining frequent flyer loyalty programs
and receiving free flights and other benefits from their flying. New
services and higher frequencies meant that business fliers could fly
to another city, do business, and return the same day, from almost any
point in the country. Air travel's advantages put long distance
intercity railroad travel and bus lines under pressure, with most of
the latter having withered away, whilst the former is still protected
under nationalization through the continuing existence of Amtrak.
By the 1980s, almost half of the total flying in the world took place
in the U.S., and today the domestic industry operates over 10,000
daily departures nationwide.
Toward the end of the century, a new style of low cost airline
emerged, offering a no-frills product at a lower price. Southwest
Airlines, JetBlue, AirTran Airways,
Skybus Airlines and other low-cost
carriers began to represent a serious challenge to the so-called
"legacy airlines", as did their low-cost counterparts in many other
countries. Their commercial viability represented a serious
competitive threat to the legacy carriers. However, of these, ATA and
Skybus have since ceased operations.
Increasingly since 1978, US airlines have been reincorporated and spun
off by newly created and internally led management companies, and thus
becoming nothing more than operating units and subsidiaries with
limited financially decisive control. Among some of these holding
companies and parent companies which are relatively well known, are
the UAL Corporation, along with the AMR Corporation, among a long list
of airline holding companies sometime recognized worldwide. Less
recognized are the private equity firms which often seize managerial,
financial, and board of directors control of distressed airline
companies by temporarily investing large sums of capital in air
carriers, to rescheme an airlines assets into a profitable
organization or liquidating an air carrier of their profitable and
worthwhile routes and business operations.
Thus the last 50 years of the airline industry have varied from
reasonably profitable, to devastatingly depressed. As the first major
market to deregulate the industry in 1978, U.S. airlines have
experienced more turbulence than almost any other country or region.
In fact, no U.S. legacy carrier survived bankruptcy-free. Among the
outspoken critics of deregulation, former CEO of American Airlines,
Robert Crandall has publicly stated:
Chapter 11 bankruptcy protection filing shows airline industry
deregulation was a mistake."
The airline industry bailout
Congress passed the Air Transportation Safety and System Stabilization
Act (P.L. 107-42) in response to a severe liquidity crisis facing the
already-troubled airline industry in the aftermath of the September
11th terrorist attacks. Through the ATSB Congress sought to provide
cash infusions to carriers for both the cost of the four-day federal
shutdown of the airlines and the incremental losses incurred through
December 31, 2001, as a result of the terrorist attacks. This resulted
in the first government bailout of the 21st century. Between 2000
and 2005 US airlines lost $30 billion with wage cuts of over $15
billion and 100,000 employees laid off.
In recognition of the essential national economic role of a healthy
aviation system, Congress authorized partial compensation of up to $5
billion in cash subject to review by the U.S. Department of
Transportation and up to $10 billion in loan guarantees subject to
review by a newly created Air Transportation Stabilization Board
(ATSB). The applications to DOT for reimbursements were subjected to
rigorous multi-year reviews not only by DOT program personnel but also
by the Government Accountability Office and the DOT Inspector
Ultimately, the federal government provided $4.6 billion in one-time,
subject-to-income-tax cash payments to 427 U.S. air carriers, with no
provision for repayment, essentially a gift from the taxpayers.
Passenger carriers operating scheduled service received approximately
$4 billion, subject to tax.) In addition, the ATSB approved loan
guarantees to six airlines totaling approximately $1.6 billion. Data
from the U.S. Treasury Department show that the government recouped
the $1.6 billion and a profit of $339 million from the fees, interest
and purchase of discounted airline stock associated with loan
Asian airline industry
Biman Bangladesh Airlines
Biman Bangladesh Airlines
Boeing 777-300ER parked at Shahjalal
International Airport, Dhaka. Biman is the flag carrier of Bangladesh.
Philippine Airlines (PAL) was officially founded on February
26, 1941, its license to operate as an airliner was derived from
merged Philippine Aerial Taxi Company (PATCO) established by mining
magnate Emmanuel N. Bachrach on December 3, 1930, making it Asia's
oldest scheduled carrier still in operation. Commercial air
service commenced three weeks later from
Manila to Baguio, making it
Asia's first airline route. Bachrach's death in 1937 paved the way for
its eventual merger with
Philippine Airlines in March 1941 and made it
Asia's oldest airline. It is also the oldest airline in Asia still
operating under its current name. Bachrach's majority share in
PATCO was bought by beer magnate Andres R. Soriano in 1939 upon the
advice of General
Douglas MacArthur and later merged with newly formed
Philippine Airlines with PAL as the surviving entity. Soriano has
controlling interest in both airlines before the merger. PAL restarted
service on March 15, 1941, with a single
Beech Model 18
Beech Model 18 NPC-54
aircraft, which started its daily services between
Nielson Field) and Baguio, later to expand with larger aircraft such
as the DC-3 and Vickers Viscount.
Boeing 747-400. Taxiing in Cebu, Philippines
Korean Air was one of the first airlines to be launched among the
other Asian countries in 1946 along with Asiana Airlines, which later
joined in 1988. The license to operate as an airliner was granted by
the federal government body after reviewing the necessity at the
national assembly. The
Hanjin occupies the largest ownership of Korean
Air as well as few low-budget airlines as of now. The
Korean Air is
among the founders of Sky Team, which was established in 2000. Asiana
Star Alliance in 2003.
Korean Air and Asiana Airlines
comprise one of the largest combined airline miles and number of
passenger served at the regional market of Asian airline industry
India was also one of the first countries to embrace civil
aviation. One of the first Asian airline companies was Air India,
which was founded as
Tata Airlines in 1932, a division of Tata Sons
Ltd. (now Tata Group). The airline was founded by India's leading
industrialist, JRD Tata. On October 15, 1932, J. R. D. Tata himself
flew a single engined
De Havilland Puss Moth
De Havilland Puss Moth carrying air mail (postal
mail of Imperial Airways) from
Karachi to Bombay via Ahmedabad. The
aircraft continued to
Madras via Bellary piloted by Royal Air Force
pilot Nevill Vintcent.
Tata Airlines was also one of the world's first
major airlines which began its operations without any support from the
With the outbreak of World War II, the airline presence in Asia came
to a relative halt, with many new flag carriers donating their
aircraft for military aid and other uses. Following the end of the war
in 1945, regular commercial service was restored in
India and Tata
Airlines became a public limited company on July 29, 1946, under the
name Air India. After the independence of India, 49% of the airline
was acquired by the Government of India. In return, the airline was
granted status to operate international services from
India as the
designated flag carrier under the name
Air India International.
On July 31, 1946, a chartered
Philippine Airlines (PAL)
40 American servicemen to Oakland, California, from Nielson
Makati City with stops in Guam, Wake Island,
Johnston Atoll and
Honolulu, Hawaii, making PAL the first Asian airline to cross the
Pacific Ocean. A regular service between
San Francisco was
started in December. It was during this year that the airline was
designated as the flag carrier of Philippines.
During the era of decolonization, newly born Asian countries started
to embrace air transport. Among the first Asian carriers during the
Cathay Pacific of
Hong Kong (founded in September 1946),
Orient Airways (later Pakistan International Airlines; founded in
Air Ceylon (later SriLankan Airlines; founded in 1947),
Malayan Airways Limited
Malayan Airways Limited in 1947 (later
Singapore and Malaysia
El Al in
Israel in 1948,
Garuda Indonesia in 1949, Japan
Airlines in 1951,
Thai Airways International
Thai Airways International in 1960, and Korean
National Airlines in 1947.
Latin American and Caribbean airline industry
TAM Airlines is the largest airline in
Latin America in terms of
number of annual passengers flown.
Among the first countries to have regular airlines in Latin America
and the Caribbean were
Bolivia with Lloyd Aéreo Boliviano, Cuba
with Cubana de Aviación,
Avianca (the first airline
established in the Americas),
Argentina with Aerolineas Argentinas,
Chile with LAN
Chile (today LATAM Airlines),
Brazil with Varig,
Dominican Republic with Dominicana de Aviación,
Mexico with Mexicana
Trinidad and Tobago
Trinidad and Tobago with
BWIA West Indies Airways
BWIA West Indies Airways (today
Venezuela with Aeropostal,
Puerto Rico with
Puertorriquena; and TACA based in
El Salvador and representing several
Central America (Costa Rica, Guatemala,
Nicaragua). All the previous airlines started regular operations well
before World War II. Puerto Rican commercial airlines such as Prinair,
Fina Air and
Vieques Air Link
Vieques Air Link came much after the second
world war, as did several others from other countries like Mexico's
Interjet and Volaris, Venezuela's
Aserca Airlines and others.
The air travel market has evolved rapidly over recent years in Latin
America. Some industry estimates indicate that over 2,000 new aircraft
will begin service over the next five years in this region.
These airlines serve domestic flights within their countries, as well
as connections within
Latin America and also overseas flights to North
America, Europe, Australia, and Asia.
Only two airlines -
Avianca and LA
TAM Airlines - have international
subsidiaries and cover many destinations within the Americas as well
as major hubs in other continents. LATAM with
Chile as the central
operation along with Peru, Ecuador, Colombia,
formerly with some operations in the Dominican Republic. The
AviancaTACA group has control of
Avianca Brazil, VIP
Ecuador and a
strategic alliance with AeroGal.
Boeing 737-800 parked at Perth International Airport.
This Indonesian flag carrier is owned by the Indonesian Government
Many countries have national airlines that the government owns and
operates. Fully private airlines are subject to a great deal of
government regulation for economic, political, and safety concerns.
For instance, governments often intervene to halt airline labor
actions to protect the free flow of people, communications, and goods
between different regions without compromising safety.
The United States, Australia, and to a lesser extent Brazil, Mexico,
India, the United Kingdom, and
Japan have "deregulated" their
airlines. In the past, these governments dictated airfares, route
networks, and other operational requirements for each airline. Since
deregulation, airlines have been largely free to negotiate their own
operating arrangements with different airports, enter and exit routes
easily, and to levy airfares and supply flights according to market
Cyprus Airways, the now defunct national airline of Cyprus
The entry barriers for new airlines are lower in a deregulated market,
and so the U.S. has seen hundreds of airlines start up (sometimes for
only a brief operating period). This has produced far greater
competition than before deregulation in most markets. The added
competition, together with pricing freedom, means that new entrants
often take market share with highly reduced rates that, to a limited
degree, full service airlines must match. This is a major constraint
on profitability for established carriers, which tend to have a higher
As a result, profitability in a deregulated market is uneven for most
airlines. These forces have caused some major airlines to go out of
business, in addition to most of the poorly established new entrants.
In the United States, the airline industry is dominated by four large
firms. Because of industry consolidation, after fuel prices dropped
considerably in 2015, very little of the savings were passed on to
Airbus A380 landing at Changi Airport. Singapore
Airlines is the first international airline to operate the A380, the
world's largest passenger airliner.
Groups such as the
International Civil Aviation Organization
International Civil Aviation Organization establish
worldwide standards for safety and other vital concerns. Most
international air traffic is regulated by bilateral agreements between
countries, which designate specific carriers to operate on specific
routes. The model of such an agreement was the Bermuda Agreement
between the US and UK following World War II, which designated
airports to be used for transatlantic flights and gave each government
the authority to nominate carriers to operate routes.
Bilateral agreements are based on the "freedoms of the air", a group
of generalized traffic rights ranging from the freedom to overfly a
country to the freedom to provide domestic flights within a country (a
very rarely granted right known as cabotage). Most agreements permit
airlines to fly from their home country to designated airports in the
other country: some also extend the freedom to provide continuing
service to a third country, or to another destination in the other
country while carrying passengers from overseas.
In the 1990s, "open skies" agreements became more common. These
agreements take many of these regulatory powers from state governments
and open up international routes to further competition. Open skies
agreements have met some criticism, particularly within the European
Union, whose airlines would be at a comparative disadvantage with the
United States' because of cabotage restrictions.
Juan Trippe, the founder of Pan American World Airways, surveying his
globe. The collapse of Pan Am, an airline often credited for shaping
the international airline industry, in December 1991 highlighted the
financial complexities faced by major airline companies.
Historically, air travel has survived largely through state support,
whether in the form of equity or subsidies. The airline industry as a
whole has made a cumulative loss during its 100-year history, once the
costs include subsidies for aircraft development and airport
One argument is that positive externalities, such as higher growth due
to global mobility, outweigh the microeconomic losses and justify
continuing government intervention. A historically high level of
government intervention in the airline industry can be seen as part of
a wider political consensus on strategic forms of transport, such as
highways and railways, both of which receive public funding in most
parts of the world. Although many countries continue to operate
state-owned or parastatal airlines, many large airlines today are
privately owned and are therefore governed by microeconomic principles
to maximize shareholder profit.
In July 2016, the total airline capacity was 181.1 billion Available
Seat Kilometers (+6.9% compared to July 2015): 57.6bn in Asia-Pacific,
47.7bn in Europe, 46.2bn in North America, 12.2bn in Middle East,
Latin America and 5.4bn in Africa.
Top 150 airline groups
Operating result ($bn)
Operating margin (%)
Net result ($bn)
Net margin (%)
The world's largest airlines can be defined in several ways. American
Airlines Group is the largest by its fleet size, revenue, profit,
passengers carried and revenue passenger mile.
Delta Air Lines
Delta Air Lines is the
largest by assets value and market capitalization.
Lufthansa Group is
the largest by number of employees,
FedEx Express by freight
Ryanair by number of international passengers
Turkish Airlines by number of countries served.
Main article: World's largest airlines
Airlines assign prices to their services in an attempt to maximize
profitability. The pricing of airline tickets has become increasingly
complicated over the years and is now largely determined by
computerized yield management systems.
Because of the complications in scheduling flights and maintaining
profitability, airlines have many loopholes that can be used by the
knowledgeable traveler. Many of these airfare secrets are becoming
more and more known to the general public, so airlines are forced to
make constant adjustments.
Most airlines use differentiated pricing, a form of price
discrimination, to sell air services at varying prices simultaneously
to different segments. Factors influencing the price include the days
remaining until departure, the booked load factor, the forecast of
total demand by price point, competitive pricing in force, and
variations by day of week of departure and by time of day. Carriers
often accomplish this by dividing each cabin of the aircraft (first,
business and economy) into a number of travel classes for pricing
A complicating factor is that of origin-destination control ("O&D
control"). Someone purchasing a ticket from
Melbourne to Sydney (as an
example) for A$200 is competing with someone else who wants to fly
Los Angeles through Sydney on the same flight, and who is
willing to pay A$1400. Should the airline prefer the $1400 passenger,
or the $200 passenger plus a possible Sydney-
Los Angeles passenger
willing to pay $1300? Airlines have to make hundreds of thousands of
similar pricing decisions daily.
Lufthansa is the flag carrier airline of
The advent of advanced computerized reservations systems in the late
1970s, most notably Sabre, allowed airlines to easily perform
cost-benefit analyses on different pricing structures, leading to
almost perfect price discrimination in some cases (that is, filling
each seat on an aircraft at the highest price that can be charged
without driving the consumer elsewhere).
The intense nature of airfare pricing has led to the term "fare war"
to describe efforts by airlines to undercut other airlines on
competitive routes. Through computers, new airfares can be published
quickly and efficiently to the airlines' sales channels. For this
purpose the airlines use the
Airline Tariff Publishing Company
(ATPCO), who distribute latest fares for more than 500 airlines to
Computer Reservation Systems across the world.
The extent of these pricing phenomena is strongest in "legacy"
carriers. In contrast, low fare carriers usually offer pre-announced
and simplified price structure, and sometimes quote prices for each
leg of a trip separately.
Computers also allow airlines to predict, with some accuracy, how many
passengers will actually fly after making a reservation to fly. This
allows airlines to overbook their flights enough to fill the aircraft
while accounting for "no-shows", but not enough (in most cases) to
force paying passengers off the aircraft for lack of seats,
stimulative pricing for low demand flights coupled with overbooking on
high demand flights can help reduce this figure. This is especially
crucial during tough economic times as airlines undertake massive cuts
to ticket prices to retain demand.
The demand for air transport will be less elastic for longer flights
than for shorter flights, and more elastic for leisure travel than for
Airbus A340-600 of
Virgin Atlantic Airways. In October 2008, Virgin
Atlantic offered to combine its operations with BMI in an effort to
reduce operating costs.
Full-service airlines have a high level of fixed and operating costs
to establish and maintain air services: labor, fuel, airplanes,
engines, spares and parts, IT services and networks, airport
equipment, airport handling services, sales distribution, catering,
training, aviation insurance and other costs. Thus all but a small
percentage of the income from ticket sales is paid out to a wide
variety of external providers or internal cost centers.
Moreover, the industry is structured so that airlines often act as tax
Airline fuel is untaxed because of a series of treaties
existing between countries. Ticket prices include a number of fees,
taxes and surcharges beyond the control of airlines. Airlines are also
responsible for enforcing government regulations. If airlines carry
passengers without proper documentation on an international flight,
they are responsible for returning them back to the original country.
Analysis of the 1992–1996 period shows that every player in the air
transport chain is far more profitable than the airlines, who collect
and pass through fees and revenues to them from ticket sales. While
airlines as a whole earned 6% return on capital employed (2–3.5%
less than the cost of capital), airports earned 10%, catering
companies 10–13%, handling companies 11–14%, aircraft lessors 15%,
aircraft manufacturers 16%, and global distribution companies more
than 30%. (Source: Spinetta, 2000, quoted in Doganis, 2002)
The widespread entrance of a new breed of low cost airlines beginning
at the turn of the century has accelerated the demand that full
service carriers control costs. Many of these low cost companies
Southwest Airlines in various respects, and like Southwest,
they can eke out a consistent profit throughout all phases of the
As a result, a shakeout of airlines is occurring in the U.S. and
elsewhere. American Airlines, United Airlines, Continental Airlines
US Airways (twice), Delta Air Lines, and Northwest Airlines
have all declared
Chapter 11 bankruptcy.
Where an airline has established an engineering base at an airport,
then there may be considerable economic advantages in using that same
airport as a preferred focus (or "hub") for its scheduled flights.
Operating costs for US major airlines are primarily aircraft operating
expense including jet fuel, aircraft maintenance, depreciation and
aircrew for 44%, servicing expense for 29% (traffic 11%, passenger 11%
and aircraft 7%), 14% for reservations and sales and 13% for overheads
(administration 6% and advertising 2%). An average US major Boeing
757-200 flies 1,252 mi (2,015 km) stages 11.3 block hours
per day and costs $2,550 per block hour : $923 of ownership, $590
of maintenance, $548 of fuel and $489 of crew; or $13.34 per 186 seats
per block hour. For a
Boeing 737-500, a low-cost carrier like
Southwest have lower operating costs at $1,526 than a full service one
like United at $2,974, and higher productivity with 399,746 ASM per
day against 264,284, resulting in a unit cost of 0.38 $cts/ASM against
Assets and financing
The 'Golden Lounge' of
Malaysia Airlines at Kuala Lumpur International
Airport (KLIA). The airline has ownership of special slots at KLIA,
giving it a competitive edge over other airlines operating at the
Airline financing is quite complex, since airlines are highly
leveraged operations. Not only must they purchase (or lease) new
airliner bodies and engines regularly, they must make major long-term
fleet decisions with the goal of meeting the demands of their markets
while producing a fleet that is relatively economical to operate and
Southwest Airlines and their reliance on a single
airplane type (the
Boeing 737 and derivatives), with the now defunct
Eastern Air Lines
Eastern Air Lines which operated 17 different aircraft types, each
with varying pilot, engine, maintenance, and support needs.
A second financial issue is that of hedging oil and fuel purchases,
which are usually second only to labor in its relative cost to the
company. However, with the current high fuel prices it has become the
largest cost to an airline. Legacy airlines, compared with new
entrants, have been hit harder by rising fuel prices partly due to the
running of older, less fuel efficient aircraft. While hedging
instruments can be expensive, they can easily pay for themselves many
times over in periods of increasing fuel costs, such as in the
In view of the congestion apparent at many international airports, the
ownership of slots at certain airports (the right to take-off or land
an aircraft at a particular time of day or night) has become a
significant tradable asset for many airlines. Clearly take-off slots
at popular times of the day can be critical in attracting the more
profitable business traveler to a given airline's flight and in
establishing a competitive advantage against a competing airline.
If a particular city has two or more airports, market forces will tend
to attract the less profitable routes, or those on which competition
is weakest, to the less congested airport, where slots are likely to
be more available and therefore cheaper. For example, Reagan National
Airport attracts profitable routes due partly to its congestion,
leaving less-profitable routes to Baltimore-Washington International
Airport and Dulles International Airport.
Other factors, such as surface transport facilities and onward
connections, will also affect the relative appeal of different
airports and some long distance flights may need to operate from the
one with the longest runway. For example, LaGuardia
Airport is the
preferred airport for most of
Manhattan due to its proximity, while
long-distance routes must use John F. Kennedy International Airport's
Home countries of airlines in the largest airline alliances: Star
SkyTeam (blue) and
Oneworld (purple). IATA codes of
founders are outlined in red.
Boeing 777-300 with special
Oneworld livery. Oneworld
is the third largest airline alliance after
Star Alliance and SkyTeam.
Codesharing is the most common type of airline partnership; it
involves one airline selling tickets for another airline's flights
under its own airline code. An early example of this was Japan
Airlines' (JAL) codesharing partnership with
Aeroflot in the 1960s on
Aeroflot operated the flights using Aeroflot
aircraft, but JAL sold tickets for the flights as if they were JAL
flights. This practice allows airlines to expand their operations, at
least on paper, into parts of the world where they cannot afford to
establish bases or purchase aircraft. Another example was the
Sabena partnership on the Vienna–Brussels–New York/JFK
route during the late '60s, using a
Boeing 707 with Austrian
Since airline reservation requests are often made by city-pair (such
as "show me flights from Chicago to Düsseldorf"), an airline that can
codeshare with another airline for a variety of routes might be able
to be listed as indeed offering a Chicago–
Düsseldorf flight. The
passenger is advised however, that airline no. 1 operates the flight
from say Chicago to Amsterdam, and airline no. 2 operates the
continuing flight (on a different airplane, sometimes from another
terminal) to Düsseldorf. Thus the primary rationale for code sharing
is to expand one's service offerings in city-pair terms to increase
A more recent development is the airline alliance, which became
prevalent in the late 1990s. These alliances can act as virtual
mergers to get around government restrictions. Alliances of airlines
such as Star Alliance, Oneworld, and
SkyTeam coordinate their
passenger service programs (such as lounges and frequent-flyer
programs), offer special interline tickets, and often engage in
extensive codesharing (sometimes systemwide). These are increasingly
integrated business combinations—sometimes including cross-equity
arrangements—in which products, service standards, schedules, and
airport facilities are standardized and combined for higher
efficiency. One of the first airlines to start an alliance with
another airline was KLM, who partnered with Northwest Airlines. Both
airlines later entered the
SkyTeam alliance after the fusion of KLM
Air France in 2004.
Often the companies combine IT operations, or purchase fuel and
aircraft as a bloc to achieve higher bargaining power. However, the
alliances have been most successful at purchasing invisible supplies
and services, such as fuel. Airlines usually prefer to purchase items
visible to their passengers to differentiate themselves from local
competitors. If an airline's main domestic competitor flies Boeing
airliners, then the airline may prefer to use
regardless of what the rest of the alliance chooses.
Fuel hedging is a contractual tool used by transportation companies
like airlines to reduce their exposure to volatile and potentially
rising fuel costs. Several low-cost carriers such as Southwest
Airlines adopt this practice.
Southwest is credited with maintaining strong business profits between
1999 and the early 2000s due to its fuel hedging policy. Many other
airlines are replicating Southwest's hedging policy to control their
Airlines often have a strong seasonality, with traffic low in Winter
and peaking in Summer. In Europe the most extreme market are the Greek
islands with July/August having more than ten times the winter
Jet2 is the most seasonal among low-cost carriers with
July having seven times the January traffic, whereas legacy carriers
are much less with only 85/115% variability.
Main article: Environmental impact of aviation
MODIS tracking of contrails generated by air traffic over the
southeastern United States on January 29, 2004.
Aircraft engines emit noise pollution, gases and particulate
emissions, and contribute to global dimming.
Growth of the industry in recent years raised a number of ecological
Domestic air transport grew in China at 15.5 percent annually from
2001 to 2006. The rate of air travel globally increased at 3.7 percent
per year over the same time. In the EU greenhouse gas emissions from
aviation increased by 87% between 1990 and 2006. However it must
be compared with the flights increase, only in UK, between 1990 and
2006 terminal passengers increased from 100 000 thousands to 250 000
thousands., according to AEA reports every year, 750 million
passengers travel by European airlines, which also share 40% of
merchandise value in and out of Europe. Without even pressure from
"green activists", targeting lower ticket prices, generally, airlines
do what is possible to cut the fuel consumption (and gas emissions
connected therewith). Further, according to some reports, it can be
concluded that the last piston-powered aircraft were as fuel-efficient
as the average jet in 2005.
Despite continuing efficiency improvements from the major aircraft
manufacturers, the expanding demand for global air travel has resulted
in growing greenhouse gas (GHG) emissions. Currently, the aviation
sector, including US domestic and global international travel, make
approximately 1.6 percent of global anthropogenic GHG emissions per
annum. North America accounts for nearly 40 percent of the world's GHG
emissions from aviation fuel use.
CO2 emissions from the jet fuel burned per passenger on an average
3,200 kilometers (2,000 mi) airline flight is about 353 kilograms
(776 pounds). Loss of natural habitat potential associated
with the jet fuel burned per passenger on a 3,200 kilometers
(2,000 mi) airline flight is estimated to be 250 square meters
(2700 square feet).
In the context of climate change and peak oil, there is a debate about
possible taxation of air travel and the inclusion of aviation in an
emissions trading scheme, with a view to ensuring that the total
external costs of aviation are taken into account.
The airline industry is responsible for about 11 percent of greenhouse
gases emitted by the U.S. transportation sector.
Boeing estimates that
biofuels could reduce flight-related greenhouse-gas emissions by 60 to
80 percent. The solution would be blending algae fuels with existing
Air New Zealand
Air New Zealand are collaborating with leading Brazilian
biofuel maker Tecbio, New Zealand's
Aquaflow Bionomic and other jet
biofuel developers around the world.
Virgin Atlantic and
Virgin Green Fund
Virgin Green Fund are looking into the technology
as part of a biofuel initiative.
KLM has made the first commercial flight with biofuel in 2009.
There are projects on electric aircraft, and some of them are fully
operational as of 2013.
Each operator of a scheduled or charter flight uses an airline call
sign when communicating with airports or air traffic control centres.
Most of these call-signs are derived from the airline's trade name,
but for reasons of history, marketing, or the need to reduce ambiguity
in spoken English (so that pilots do not mistakenly make navigational
decisions based on instructions issued to a different aircraft), some
airlines and air forces use call-signs less obviously connected with
their trading name. For example,
British Airways uses a Speedbird
call-sign, named after the logo of its predecessor, BOAC, while
SkyEurope used Relax.
Airbus A320 landing at Domodedovo
The various types of airline personnel include: Flight operations
personnel including flight safety personnel.
Flight crew, responsible for the operation of the aircraft. Flight
crew members include:
Pilots (Captain and First Officer: some older aircraft also required a
Flight Engineer and/or a Navigator)
Flight attendants (led by a purser on larger aircraft)
In-flight security personnel on some airlines (most notably El Al)
Groundcrew, responsible for operations at airports. Ground crew
Aerospace and avionics engineers responsible for certifying the
aircraft for flight and management of aircraft maintenance
Aerospace engineers, responsible for airframe, powerplant and
electrical systems maintenance
London Heathrow Airport,
Avionics engineers responsible for avionics and instruments
Airframe and powerplant technicians
Electric System technicians, responsible for maintenance of electrical
Airbus A340-300 taxiing to stand at T4.
Remote centralised weight and balancing
Passenger service agents (such as airline lounge employees)
Reservation agents, usually (but not always) at facilities outside the
Airlines follow a corporate structure where each broad area of
operations (such as maintenance, flight operations (including flight
safety), and passenger service) is supervised by a vice president.
Larger airlines often appoint vice presidents to oversee each of the
airline's hubs as well. Airlines employ lawyers to deal with
regulatory procedures and other administrative tasks.
Map of scheduled airline traffic in 2009
The pattern of ownership has been privatized in the recent years, that
is, the ownership has gradually changed from governments to private
and individual sectors or organizations. This occurs as regulators
permit greater freedom and non-government ownership, in steps that are
usually decades apart. This pattern is not seen for all airlines in
Growth rates are not consistent in all regions, but countries with a
de-regulated airline industry have more competition and greater
pricing freedom. This results in lower fares and sometimes dramatic
spurts in traffic growth. The U.S., Australia, Canada, Japan, Brazil,
India and other markets exhibit this trend. The industry has been
observed to be cyclical in its financial performance. Four or five
years of poor earnings precede five or six years of improvement. But
profitability even in the good years is generally low, in the range of
2–3% net profit after interest and tax. In times of profit, airlines
lease new generations of airplanes and upgrade services in response to
higher demand. Since 1980, the industry has not earned back the cost
of capital during the best of times. Conversely, in bad times losses
can be dramatically worse.
Warren Buffett in 1999 said "the money that
had been made since the dawn of aviation by all of this country's
airline companies was zero. Absolutely zero."
As in many mature industries, consolidation is a trend. Airline
groupings may consist of limited bilateral partnerships, long-term,
multi-faceted alliances between carriers, equity arrangements,
mergers, or takeovers. Since governments often restrict ownership and
merger between companies in different countries, most consolidation
takes place within a country. In the U.S., over 200 airlines have
merged, been taken over, or gone out of business since deregulation in
1978. Many international airline managers are lobbying their
governments to permit greater consolidation to achieve higher economy
Airline social networking services
Airlines of Africa
Airlines of North America (book)
Environmental impact of aviation
Federal Aviation Administration
Government contract flight
International Air Transport Association
Transportation Security Administration
World's busiest passenger air routes
Airline related lists
Airline liveries and logos
List of airlines
List of accidents and incidents involving commercial aircraft
List of airline holding companies
List of airline mergers and acquisitions
List of defunct airlines
List of helicopter airlines
List of hub airports
List of low-cost airlines
List of national airlines
List of regional airlines
Airline bankruptcies in the United States
World's largest airlines
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Wikimedia Commons has media related to Airlines.
Chasing the Sun – History of commercial aviation, from PBS
Global Aviation Markets Whitepaper on global markets for airlines
Commercial air travel
Airline holding companies
United States (A4A
Other regions (AACO
First class (aviation)
First class travel
Aircraft seat map
Buy on board
Crew rest compartment
Airport rail link
Low cost carrier terminal
Customs / Immigration
Arrival card (Landing card)
Impact on environment
Air transport agreement
Bermuda Agreement (UK-US, 1946-78)
Bermuda II Agreement (UK-US, 1978-2008)
Cross-Strait charter (China-Taiwan)
Cape Town Treaty
Convention on the Marking of Plastic Explosives
European Common Aviation Area
Freedoms of the air
Hague Hijacking Convention
Open skies (EU–US Open Skies Agreement)
Paris Convention of 1919
Baggage handling system
Air Navigation and Transport Act
Air traffic control
Air traffic control (ATC)
Aircraft safety card
Airport crash tender
National aviation authority
Pre-flight safety demonstration
Unruly aircraft passenger
Airline booking ploys
Airline reservations system
Fare basis code
Flight cancellation and delay
Government contract flight
Passenger name record
Aircraft maintenance technician
Aircraft ground handler
Mile high club