Expenses and Costs Facing Todays Air Industry
The past decade proved a tumultuous one for the global airline industry. However, the last three years have offered companies in the sector some relief. Lower than expected oil prices, stable international economic growth, increasing consumer demand, and political goodwill from various leaders continue to result in favorable outlooks into the future. As Karp (2017) provides, consumers are exhibiting high confident levels relative to air travel which serves to allow affiliated organizations to consider developments in tandem with passenger expectations. This has resulted in unprecedented increases in costs and expenses in the current air industry leading to lower profits and dwindling interest from investors.
Operating expenses stem from different avenues and are further subdivided into indirect and direct costs (Heshmati & Kim, 2016). Another direct cost worth considering is associated with aircraft overhaul, maintenance, and depreciation costs. These are quite significant especially in instances where recently purchased aircraft are found to be harboring significant operational defects. This often leads to aircrafts which are high value assets being grounded by f