Industry primers

Industry primer

Airlines and Transport: A Case Interview Primer

A plane, truck or train costs nearly the same to run full or empty, and margins are thin, often single digits.

What's new here: how airlines and transport make money.

The business
Market
Not used in this case
Existing businessRevenue
Product 1
Price
  • List price
  • Discounts and promotions
  • Mix across tiers or sizes
  • Price against competitors
  • What customers are willing to pay
Quantity
  • Number of customers: market size x your share
  • Purchases per customer: how often they buy
  • Units per purchase
  • Customers kept versus lost
  • Capacity: how many you can actually serve
Product 2
Service 1
For a service, units are visits, hours or members
Mix
  • Share of revenue from each
Existing businessCost
Variable
Product 1
  • Materials or inputs per unit
  • Labor per unit
  • Delivery
  • Payment fees
Product 2
Service 1
Fixed
  • Rent
  • Salaried staff
  • Marketing and overhead
New business
Not used in this case
Operations and risks
Not used in this case
The business
  • 1MarketNot used
  • 4New businessNot used
  • 5Operations and risksNot used

A plane, truck or train costs nearly the same to run full or empty, and margins are thin, often single digits.

How the business makes money: who pays, for what, and the main costs.

Who pays

In airlines and transport

  • Passengers, for airlines
  • Shippers, for trucking and rail

For what

In airlines and transport

  • A seat on a trip, plus extras such as bags
  • Moving goods from one place to another

How revenue is earned

In airlines and transport

  • Seats flown × share filled × fare
  • Plus bags, seat choice and cargo in the hold

The main costs

In airlines and transport

  • Aircraft or trucks, crew and airports: mostly fixed once the schedule is set
  • Fuel: the big variable line, which swings with oil prices

What decides profit

In airlines and transport

  • Filling capacity at a good fare
  • Margins are thin, often single digits

An empty seat or an empty truck still costs money, and earns nothing once it leaves.

Create a free account to read the rest.

It takes a minute, and reading is always free.

Create a free account I have an account: sign in

Reading helps. A live case shows you where you stand.

Try your first case free Start Learn free