Narrator: From whipping up millions of in-flight meals
to repainting aircraft ...
Patres: Jump and slide!
Narrator: ... to training flight attendants,
running an airline is complicated.
While airlines make billions,
they're also spending ...
Taylor: Billions of dollars a year
to run an operation as complex
as flying a giant metal tube through the sky.
Narrator: And it's only gotten more costly.
Taylor: Combined, labor and fuel
has gone up about 97% year over year.
Narrator: But despite the industry's mile-high budgets,
passengers are more dissatisfied with air travel than ever.
So what do airlines actually spend their money on?
And why don't all these expenses result in happy travelers?
We're a far cry from the golden age of flying,
when passengers sat in wide, cushy seats,
enjoyed full-course meals,
and smoked as much as they wanted.
While flying might not be as glamorous today,
it is a lot safer.
And airlines are still pouring money
into keeping you comfortable in the sky.
That starts with food,
which makes up about 2% of airlines' annual spending.
In 2019, Emirates pumped out about 200,000 meals a day.
What makes this operation so expensive
is chefs are constantly updating the menus.
Plus, Emirates offers different meals
depending on where you're flying.
So if you're headed to France,
you'll get a croissant in the morning.
Flying to India?
You'll most likely get a crisp kachori.
Stopping off in Japan?
How about some soba or a bento box?
It all gets cooked up
inside 24-7 catering kitchens in Dubai.
Back in 2019, plates, trays, and utensils
were unloaded off incoming planes and cleaned.
Up in the cold room,
chefs prepared appetizers,
like sandwiches.
In the hot room,
they handled all the main dishes.
Here, they mix big vats of vegetables,
grill lines of lamb chops,
and top rows of dishes with garnishes.
Each plate has to taste and look exactly the same.
Every piece converges onto one tray.
And finally, all the trays are placed on trolleys
bound for aircraft.
Now, how much does an airline spend to keep a fleet flying?
Well, a lot.
Just under 2% of the budget goes to maintenance materials.
This is Delta Air Lines Technical Operations,
one of the largest aircraft repair shops in North America.
Staff fix commercial jets
not only from Delta's fleet,
but 150 other aviation operators.
Matthew: That's probably UPS right there.
We have Azur, Gol Brazil,
and Virgin Australia engines.
Narrator: This is a bustling and expensive operation.
The work never stops because the planes never stop.
Narrator: Most of the cost comes from labor.
Some mechanics, technicians, and engineers
make six figures.
Taylor: They have to understand how to fix a broken engine
to make sure that it runs safely.
So naturally,
these super complicated, niche jobs
that take years of training
need to get paid more.
Narrator: But there's also those parts.
Take for example this one.
In 2020, it costs $12,000 to replace.
Matthew: And there's 80 of them.
Narrator: Add in the price of the surrounding parts, and ...
Matthew: We're looking at about $2.2 million
sitting on the table.
These are very high-value parts,
so repairing them is the most economical way
to keep our engines flying.
Narrator: Heavy maintenance,
where an engine has to be completely taken apart,
can take over a month.
Matthew: 2,000-piece parts
that have to be individually inspected and maintained.
Narrator: One engine can cost over $20 million,
so it saves airlines a ton of money
to keep it in the air longer.
But the actual repair shop isn't cheap, either.
Delta invested $100 million in new facilities
from 2018 to 2020.
TechOps has all kinds of fancy gear:
laser welding equipment,
turbine grinders,
and the largest engine test cell in the world.
Also part of maintenance? Repainting planes,
which needs to happen every seven to 10 years.
Taylor: Bloomberg found out
that a repaint for an American Airlines
typical wide-body jets
could be about $200,000.
Narrator: That price tag isn't that surprising
when you consider
it took a British Airways 10-person crew 950 hours
to repaint this A319.
But planes have to be repainted.
Because as dust, oil, grease, and water
chip away at the paint,
it can expose unprotected metal to oxygen,
leading to corrosion.
Propellers and landing gear could fail,
or harmful UV rays could penetrate the aircraft.
When planes touch down for a new paint job,
they come here, to Roswell, New Mexico.
First, anywhere from 600 to 1,200 pounds of paint
are stripped away.
They cover the windows
so they can sand down logos by hand
and apply a heavy paint thinner.
It melts away the paint overnight.
Next, this greenish-yellow zinc compound
slows down corrosion
and blocks out those UV rays.
Then, workers paint the plane with a spray system.
For an average Boeing 737,
each layer of paint is only an eighth of a millimeter thick,
but adds 1,300 to 2,200 pounds to the aircraft.
They tend to pick light colors,
like white or gray,
to reflect the sun's heat.
Taylor: Intricate designs,
heavy line work,
lots of different colors will create more man hours,
so more cost for labor.
Narrator: But surprisingly,
airlines have a bigger budget for just landing an aircraft
than they do for maintenance materials.
2.5% of operating expenses go to landing fees.
Taylor: Landing and using their ramp space,
using their runways and taxiways.
And then you have other fees
like gate space, counter space,
using the jet bridge.
Narrator: New Jersey's landing fee
is about $5 per passenger.
There's also what's called a flyover fee.
Taylor: For aircraft that fly over the US
but don't take off or land in the US,
will be anywhere from $20-ish to $60-ish.
Narrator: And sometimes airlines have to invest
in entirely new planes.
In 2022, that came out to about 7%
of an airline's Q4 budget.
Taylor: The airlines like to be very hush-hush
about how much they actually spent for their aircraft.
Narrator: While a new A350-900 in 2018
was listed at over $300 million,
that's not what airlines actually pay.
It's been reported they get about a 50% discount.
Taylor: In reality, they likely got a very good deal
because they bought in bulk.
Southwest is Boeing's largest customer for the 737.
It's very likely that Southwest does get good deals.
Narrator: But even for Southwest,
deals have been harder to come by.
Supply-chain issues
have pushed both Boeing and Airbus behind schedule.
Now there's a shortage of single-aisle jets.
United ordered 53 Boeing 737 Maxes this year.
But the company has only received seven.
Now, when airlines drop that much cash,
they're not just paying for the plane.
Taylor: Avionics, the tires,
which can be a couple thousand dollars each.
You have the cabin mock-ups.
Then you have to buy the engines,
which is probably one of the largest costs
besides the plane itself.
Narrator: Those costs also include
making it comfortable inside,
even for passengers stuck in economy for 15 hours.
Some airlines partner with manufacturers
to customize interiors.
But others build cabins out themselves.
Alice: There is thousands of hours in engineering
that has to be done to install all that equipment.
Ashley: What makes our job very challenging
is it's a game of inches.
It's fighting for every little bit of space.
Narrator: Ashley is in product development with Delta.
She comes up with fixes to customer complaints
inside planes
and then partners with engineers like Alice
to bring them to life.
One of their projects was these overhead bins.
Alice: Delta came to us and said,
"Hey, we have this problem.
We spend a lot of money on back injuries
to flight attendants.
Can you guys think of some way to fix it?"
And so we were given the challenge to say,
"Is there an easier, better way
to be able to push up these bins?"
We partnered with a supplier in Germany
to come up with this electromechanical device.
Ashley: The bin lift assist will actually click on
when this weight reaches 45 pounds,
and it will make the close force
like I'm closing a bin with only 35 pounds inside.
Narrator: And what about those fancy $25,000
first-class suites?
Well, Emirates custom-designs and builds those.
And as of 2019,
the first-class suites were fully enclosed.
Rachel: That is so much leg room in first class.
Like, you could be very tall
and still not reach the end.
The table pops out from the side.
You just have to pull it out.
And it's huge.
Narrator: First-class passengers also get access
to the shower spa in the sky
and this full-service bar.
Now, do airlines make their money back
from all that first-class investment?
Actually, yeah.
They make a significant amount of their passenger revenue
from customers in business class or higher.
The second-biggest cost for airlines? Fuel.
It accounted for about 17%
of airlines' fourth-quarter budgets last year.
Taylor: We've seen about an 80% increase year over year for fuel.
Pent-up demand from the pandemic
going into the end of 2021,
that increased the price of fuel.
People were traveling more.
And then going into this year,
the war in Ukraine has also unfortunately cut oil supplies.
Narrator: The fluctuating fuel prices
have affected some airlines more than others.
Fuel hedging is basically a strategy
that airlines like Southwest, for example, use
to fix the price of fuel that they pay per gallon.
So that can be a good thing
when the price of fuel skyrockets,
but they can take a loss when the price of fuel drops.
But they always know what they're going to be paying for fuel.
Narrator: For airlines that don't hedge,
like American Airlines,
fuel for a flight from Tokyo to LA
went from costing $17,800 in 2019
to over $31,000 in 2022.
And the most expensive thing for any airline?
Its people.
That would be labor.
Narrator: Labor makes up about a third
of an airline's budget.
The rest is a mash-up of dozens of other expenses,
from insurance to non-aircraft ownership.
But back to labor.
We're talking about the salaries of pilots,
flight attendants, bag handlers,
ticket agents, cleaners, maintenance crew,
you name it.
During the pandemic lockdown,
airlines used taxpayer dollars to cover payroll.
The airlines also encouraged employees to take buyouts
or retire early.
But as demands for flights rebounded,
that left airline short-staffed.
And the fallout hit hardest in the summer of 2022.
Taylor: We have been calling it travel chaos,
where airlines have been canceling
and delaying thousands and thousands of flights.
And that has been boiling since the pandemic.
You've had pilots mass-retire.
Ground staff left during the pandemic
and they have not come back.
Just haven't had enough people.
Narrator: Airlines had to raise wages
to draw back talent.
Some are up by as much as 50%.
Taylor: The pilots are probably the biggest winners
of the pay raises right now.
Some of those pilots got their salaries actually tripled.
Narrator: Some pilots are coming in at $140 an hour.
Heathrow baggage handlers negotiated a 7.5% pay raise,
and new American Airlines flight attendants
got a $6,000 raise.
And educating new workers is very expensive.
Taylor: So a lot of the budget for training
is likely also under labor.
So you're paying the trainees for this time,
and you have to pay the trainers for that time.
Stay seated!
Recording: Evacuate. Evacuate.
Narrator: Take for example the flight attendant training
at Delta's Atlanta facility.
It's a six-week program,
and trainees are paid for their time.
Patres: A lot of the times,
I think the perception is that we're waitresses in the sky.
Trel: First and foremost, we are safety professionals.
Anything that can happen on the ground
can happen in the air.
Narrator: Trel and Patres
teach flight attendant hopefuls everything they need to know
about safety and service.
And Delta splurges on equipment
to help with their training.
It's going to be like the simulators,
which are not cheap,
which typically have some sort of cabin mock-up.
Narrator: Trainers run drills
under these intense conditions.
Recording: Evacuate. Evacuate.
Trel: Release seat belts!
Leave everything!
Bad exit, go back!
Patres: Come this way.
Leave everything.
Jump and slide.
Trel: If you don't stay calm,
then your anxiety will feed off of that person.
It's definitely important to make sure you stay calm.
Narrator: Pilots also have to go
through extensive and pricey training,
like in this British Airways simulator,
costing $13 million in 2018.
Taylor: So American Airlines regional carrier actually
recently upped their trainer pay,
the pilots that train pilots in the simulators,
to some $400-plus an hour.
Narrator: So with all these expenses
zapping away their billions,
do airlines actually make money?
Taylor: It seems on paper like they do,
but it is generally a low margin.
Narrator: Airline profitability already lagged
behind the US corporate average pre-pandemic.
And then the effects of 2020 trashed airline income.
Taylor: They just didn't have anybody flying.
Over the summer,
all of these cancellations and delays from the airlines
really impacted the bottom line.
Narrator: It got so bad,
some governments had to step in.
US airlines saw $54 billion in bailouts.
It might seem like a lot,
but consider Delta alone saw a $7 billion loss
in Q2 of 2020.
Still, it's unclear if the bailouts helped a ton.
Only a few airlines like Delta, Etihad, and Qatar Airways
are starting to see profits after years of losses.
Delta managed to break $1 billion in pretax income
before June 2022.
But that's still nowhere near pre-pandemic levels.
In the same quarter of 2019,
Delta made twice that amount.
Taylor: In the grand scheme of things,
that is not a large margin for the airline industry.
Narrator: So if airlines aren't even making a lot,
is all the spending justified?
Taylor says yes.
Taylor: I don't think there is any room for error,
meaning it is a very, very safe industry,
but it's high-consequence.
If you skimp on budget, you cut corners,
catastrophes could happen.
But the reason that airlines across the world
are able to daily run thousands of flights safely
without any issues
is because they invest the money in safety,
and they invest in the well-being of their customers.