During periods of rapidly increasing prices, airlines can try to adjust fares to compensate for the added costs, but if the prices change quickly enough there can be a significant lag in the airlines ability to compensate with the needed fare hikes. To make matters worse, the airlines must consider what effects system-wide fare hikes might have on demand for their services. Although demand for air travel is not overly price sensitive, especially among business travelers, big enough price hakes can impact leisure travel significantly in the short-term. As a result, airlines are at times forced to eat increased fuel costs in part or even in total depending on the duration of the period of increased fuel prices. Fleet Maintenance and Replacement Running an airline requires enormous capital investment.
Aircraft are extremely expensive to procure and maintain.
In an ideal world, a given aircraft might fly forever if properly maintained. Unfortunately, aircraft wear out, even if they are properly maintained. Furthermore the proper maintenance required to keep an airplane flying reliably throughout its life is very costly. To mitigate these costs, airlines must develop effective maintenance and procurement programs. They must decide whether to lease or buy their aircraft and they must make decisions about when and how they will perform comprehensive maintenance in order to keep the fleet profitable.