Breakeven Analysis of Airline Industry Breakeven analysis suggest that, Airlines should make such a revenue that per unit fixed cost should equal their contribution margin; which means airlines will be covering all their expenses. Airlines should cover all their expenses to reach breakeven, including fixed and variable costs. There are following factors which are holding airlines back to reach breakeven: Volatility in prices of oil: Airline industry is pretty complex from breakeven point of even, because they offer services. Major part of cost of airline industry is Fuel prices, which are highly volatile and cannot be forecasted for sure. Airline is highly competitive industry and demand is highly elastic, if airline tries to shift the increased prices to customers through increased fares, they may lose a lot of customers. Fuel prices a major part of variable expanses of indus ...
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