Bankruptcy - Airlines.

The airline industry consistently breaks the number one rule of business: The job of the company is to make money.

Planes are expensive. Fuel prices jump around a lot. It's hard to predict how many people will want to fly next year. But all airlines face these challenges and only some file for bankruptcy.

Legacy airlines date back to the days when interstate airlines were heavily regulated by the government. And it does seem like they've had a particularly hard time. American Airlines declared bankruptcy last month, following in the footsteps of Delta, Northwest, United, US Airways and Continental. Some of them have gone through bankruptcy twice.

Before 1978, life for the legacy airlines was pretty sweet. The government set ticket prices. If regulators didn't think airlines were making enough money, ticket prices would be allowed to rise. Instead of competing to offer the lowest ticket prices, the airlines offered more and more amenities things like bigger seats. Some 747s even had piano bars.

All that changed with deregulation in 1978. Bob Crandall was working at American Airlines at the time, and he remembers what it was like.

"Somebody decides to start a new airline and they come into the business and decide that they are only going to charge $29 for a seat," says Crandall. "Then I don't have any choice, I have to charge $29 for my seats too, even if a seat cost me $100."

Those new, low-cost carriers — such as AirTran, Southwest, and JetBlue — have a key advantage over the legacy airlines. "They get much more productivity out of their workers," he says. "The jobs are defined more broadly and their workers tend to be able to cover more of the work load."

Airlines keep on forgetting that these days consumers are more price conscious. Airlines have to adjust to it. Airline travel is no longer a luxury like it used to be in 1978. Airplanes are flying everywhere now, and in some cases for a cheaper price for a seat.

The number one golden rule applied here is, what hotels do. You have a plane, its flying from say, Mumbai to Dubai - the airline will try to fill in every last seat available on the flight because once the flight has closed, that seat will make no money at all. Pretty much the same rule applies to hotels, once the night has passed an empty room makes no money at all. This all seems easy enough to understand but it is a bit more complicated to apply.

Full service airlines have to account for number of meals on board, luggage (especially with the free baggage allowance), number of babies on board, number of premium passengers on board for the extra services they have to provide, so they can not just go on selling seats until the last minute like the low cost carriers. Everyone from catering to maintenance to refueling team is involved.

To examine the middle east market, as i have mentioned before, you have a wide variety of carriers operating in the middle east. Notable low cost carriers would be FlyDubai and Air Arabia, then you have, albeit on a smaller scale, Nas Air, Gulf Traveler (which seems to have disappeared), Jazeera Airways (which has drastically scaled back on operations).

These players know how to use their aircraft optimally. Running from airports that are operational 24hrs a day, giving the flexibility of aircraft staying in the air for a longer period of time - as the say goes - aircraft make money only when they are flying. Staff are utilized to their fullest potential and well sometimes over because there is no rules regulating staff rights and other benefits as the American market. Since they are relatively new the aircraft are younger and more efficient, then there is the pricing of Jet Fuel which is better priced in this part of the world.