page_title: Airline
section_title: Revenue
hierarchical_section_title: Airline / Economy / Revenue
caption_attribution_description: English: Airline Distribution Network
context_page_description: 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, in which they both offer and operate the same flight. Generally, airline companies are recognized with an air operating certificate or license issued by a governmental aviation body. Airlines may be scheduled or charter operators.
  The first airline was the German airship company DELAG, founded on 16 November 1909. The four oldest non-airship airlines that still exist are the Netherlands' KLM, Colombia's Avianca, Australia's Qantas and the Czech Republic's Czech Airlines.
  Airline ownership has seen a shift from mostly personal ownership until the 1930s to government-ownership of major airlines from the 1940s to 1980s and back to large-scale privatization following the mid-1980s. Since the 1980s, there has also been a trend of major airline mergers and the formation of airline alliances. The largest alliances are Star Alliance, SkyTeam and Oneworld, and these three collectively accounted for more than 60% of global commercial air traffic in 2015.
context_section_description: 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 purposes.
  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 Melbourne to 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.
  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.
  Over January/February 2018, the cheapest airline surveyed by price comparator rome2rio was now-defunct Tigerair Australia with $0.06/km followed by AirAsia X with $0.07/km, while the most expensive was Charterlines, Inc. with $1.26/km followed by Buddha Air with $1.18/km.
  For the IATA, the global airline industry revenue was $754 billion in 2017 for a $38.4 billion collective profit, and should rise by 10.7% to $834 billion in 2018 for a $33.8 billion profit forecast, down by 12% due to rising jet fuel and labor costs.
  The demand for air transport will be less elastic for longer flights than for shorter flights, and more elastic for leisure travel than for business travel.
  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
caption: Diagram of an airline Global Distribution System
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