Several factors have crippled airlines’ profitability and contribute to a difficult operating environment today.

• Increased Competition
  The growth of the "no frills, low cost" airline companies has changed competition within the air industry. The major airlines are under pressure to cut cost. Some have reduced services, i.e. meals, in order to lower costs. Some airlines have resorted to fewer destinations or planes. Cost saving have also come from cutting personnel. Some airlines have tried to negotiate for lower wages.

• Increased Fuel Prices
  Fuel is the second largest operating expense for airlines. The sharp rise in oil prices from US$20s to above US$100 since 2000 has greatly increased the operating costs of airlines.

• Funding Issues
  The 2008 financial crisis and ongoing Euro crisis have made financing difficult for many airlines in the US and Europe. European banks in particular are pulling back from commercial aircraft financing. Capital-starved western airlines are turning to Asian lenders to fund their fleet upgrades. Airlines will have to make greater use of the bond markets to pay for aircraft. Also, airlines are likely to lease more aircraft rather than buy them outright.
  
  Aircraft financing is becoming more expensive following an international agreement to raise the fees that developed countries’ export credit agencies charge for guarantees on aircraft purchases.