Airline industry Quote by Peter Thiel
““Creating value is not enough—you also need to capture some of the value you create. This means that even very big businesses can be bad businesses. For example, U.S. airline companies serve millions of passengers and create hundreds of billions of dollars of value each year. But in 2012, when the average airfare each way was $ 178, the airlines made only 37 cents per passenger trip. Compare them to Google, which creates less value but captures far more. Google brought in $ 50 billion in 2012 (versus $ 160 billion for the airlines), but it kept 21% of those revenues as profits—more than 100 times the airline industry’s profit margin that year. Google makes so much money that it’s now worth three times more than every U.S. airline combined.””
About This Quote
Source Book: Zero to One, 2014
Creating value isn’t sufficient; firms must also retain a share of the value they generate, otherwise they risk being inefficient despite size.
In simple terms: Value must be captured, not just created.
Key Takeaway
Focus on profit capture as well as value creation.
Themes
business strategy
profitability
economics
competition
value capture
Mood
analytical
critical
pragmatic
Type
advice
analytical
strategic
When to use this quote
- startup planning
- corporate finance
- industry analysis
- strategic consulting
Key Concepts
Economic rent
market power
business models
Questions to Reflect On
- How can a company improve its profit margin without sacrificing value?
- What mechanisms allow some firms to capture more value than others?
A Different Perspective
Large firms can be low‑margin despite high output; capture may be limited by regulation or market forces.
