[Ekaros]

Airlines are not great business. Margins are not great. Fuel is significant part of their operating costs. And if it goes up too much in too short time the whole model breaks. Less margins you have the more you will be impacted. So if you are operating at edge by default fast move in costs will destroy you.

[gib444]

IAG in 2025 had a record operating margin of 15.1%.

Ryanair's gross profit margin for fiscal years ending March 2021 to 2025 averaged 19.1%.

Some are (were?) doing just fine - in Europe at least.

Sure, it's no Big Tech or banking, but it's not like the single low digit percentage of eg retail.

Perhaps some USA airlines need some advice from across the pond?

[Wurdan]

The business model works fundamentally differently in the US and Europe due to geography. The US is big, meaning that flights are often longer, meaning that fuel is a bigger portion of the operating cost. And fuel is essentially something airlines can’t reduce the cost of compared to other operating costs where it might be possible to optimize for greater efficiency.

[gib444]

> meaning that flights are often longer

Got any sources?

I found:

Europe average flight length (2024): 1,157km [0]

USA average flight length (I could only find old data, 2005): 1,110km [1] (even if we index this up based on upward trends, maybe another 150km, that doesn't seem a huge difference to me?)

> The US is big

And Europe is big too. It's actually a bit bigger than the USA by land size.

Btw, IAG is a global airline group. Only ~32% of IAGs revenue is intra-Europe and domestic. Another data point: Turkish Airlines (very long-haul focused airline) 2025 net income margin was 12.1% in 2025.

I'm not sure your explanation is sufficient. I don't see the exception in the USA? I am certainly willing to accept there are other differences and challenges in the USA, but I don't think it's been presented yet in this discussion.

And remember the original claim was "Airlines are not great business. Margins are not great"

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EDIT: I found https://www.airportroutes.com/airlines/NKS/ which does highlight that Spirit flew lengths longer compared to Europe's average, at 1,577 km - but then using the same source for Ryanair https://www.airportroutes.com/airlines/RYR/ it's 1,456km, so again, not a huge difference. So comparing 2 seemingly very similar airlines, the European one has both managed to be profitable and not go bankrupt...

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[0] https://www.eurocontrol.int/publication/eurocontrol-data-sna...

[1] https://www.hsdl.org/c/view?docid=25985

[Wurdan]

How are you counting average distances? Simply as the distance between two points in the carrier’s network, or are you looking at the lengths of each individual flight?

The source for the point I made is a Wendover video - Why Budget Airlines are Suddenly Failing

[esseph]

You need to look at things like average distance and median distance, do some filtering for most common destinations (example: NYC to LA, San Francisco to Miami, Denver to DC, etc), fuel costs, but also operating costs. Salaries and everything cost much more in the US than they do in Europe.

Cost Per Seat Mile is $0.07 for RyanAir and $0.12 for Spirit, not counting fuel. Spirit hovers around 80% capacity while RyanAir is around 94%.

RyanAir's niche is secondary airports while Spirit was compeating with larger airlines at places like LAX where gate costs are higher.

In 2024 to 2025 there was an engine problem that required Spirit to ground 40% of the fleet to deal with it. Meanwhile they still had to pay for those aircraft with no revenue. This caused a major hit to the financials for a carrier that already runs on thin margins.

I'm sure there's more to it, but these are the larger things I've found.

[gib444]

Definitely a good point about CASM. Thanks for highlighting. I do see it's one of the lowest in the industry though

Fuel obviously plays a big part. Guess they also got unlucky with the engines (though could they have made better choices? Perhaps a Franco-American engine company like Ryanair ? ;)

> Salaries and everything cost much more in the US than they do in Europe.

Doesn't that mean they can charge more? We're regularly told the USA is rich and Europe is poor, so the customers must be able to pay more.

> Spirit hovers around 80% capacity while RyanAir is around 94%.

Spirit could have gotten better at filling seats. Perhaps learning from Ryanair. Or is there some thing in the USA that prevents exceeding 80% capacity? US customers not liking planes beyond 80% capacity?

It makes me think their business surviving was highly dependant on low fuel prices? So the collapse was a shock to nobody in the industry?

[esseph]

> It makes me think their business surviving was highly dependant on low fuel prices?

Basically.

The entire modern economy depends on the price of gas/diesel/jet fuel being between $X and $Y. If it goes outside of those parameters for too long, everything shuts down. Oil gets too expensive or too cheap to extract and refined and transport, then the money goes other places.

[brohee]

Europe has passenger trains that work. What would be a short flight in the US, e.g. London to Paris is done more my train through the chunnel than flying unless you got a connecting flight.