The aviation economy: who actually makes money when a plane takes off

Every time a plane takes off, a long chain of businesses gets paid: the airport, the fuel supplier, the lessor who owns the aircraft, the engine maker who sells the spare parts, the caterer, the ground handler, the payments company that processed the ticket. The airline sits at the end of that chain and keeps whatever is left. In a good year that is a few per cent. In a year like this one, it can be nothing.

The fuel shock

Fuel is the single biggest reason airline profits swing so hard. This year the swing came from the Middle East. The war with Iran and the fight over the Strait of Hormuz pushed jet fuel prices up sharply, and the trade body IATA nearly halved its 2026 profit forecast for the industry in June. Before the war it had been expecting a record year of around $41bn in net profit.

The numbers at individual carriers show how thin the margin is. The FT reported that the four big US airlines faced roughly $280mn of extra fuel cost between them for every week prices stayed elevated. American Airlines cut its outlook twice and warned it could end the year around breakeven despite record revenue. Lufthansa warned profits could fall and its shares dropped more than 10 per cent in a day. In Europe the worry went beyond price: the FT reported that airports could face systemic jet fuel shortages if the strait did not fully reopen.

Airlines can hedge, but not all of them are in a position to, and hedges only delay the pain. The rest is passed to passengers through fares and route cuts.

Not enough planes

You would think a fuel shock would leave airlines with too many aircraft. The opposite is true. Airbus and Boeing cannot build planes fast enough. Airbus ended March with a backlog of 9,037 commercial aircraft, roughly a decade of production at current rates, and it only narrowly beat a delivery target it had already cut last year. The bottleneck is not the airframe. It is engines, castings and skilled labour. Airbus has openly blamed Pratt & Whitney for holding back A320 output.

The result is that old planes keep flying. That is good news for maintenance and repair shops, which the FT describes as enjoying a boom, and for anyone who owns a spare engine. Engines have become so valuable that owners now lease out the engines rather than whole aircraft.

Where the profit sits

Put those two facts together and you get the real story of the aviation economy. The FT summed it up in one headline: as airlines struggle, their suppliers are flying high. Engine makers earn most of their money on aftermarket parts, and a shortage of new aircraft means more hours on old engines. Lessors earn more when planes are scarce. Airports and fuel suppliers get paid whether or not the flight was profitable.

The airlines that do well are the ones that have moved away from selling seats as a commodity. Delta, for example, expects earnings to jump on the back of a 'premium arms race', meaning business cabins, loyalty schemes and credit-card partnerships. Those revenue lines are far less exposed to the fuel price than the economy cabin is.

What to watch

• Fuel. Every dollar on the barrel flows almost straight through to airline margins. Watch the Hormuz shipping traffic before you watch airline results.
• Deliveries. If Airbus and Boeing finally get engines on time, the second-hand and leasing market softens and airlines recover pricing power. If they do not, suppliers keep winning.
• Premium mix. The gap between carriers that sell premium cabins and loyalty and carriers that only sell seats will widen.

The lesson for anyone looking at the sector: the plane is the product, but the airline is not necessarily the business.