Fundamental business issue?

I read with interest the headline that Virgin airlines have been "forced" into a loss-making situation due to high fuel costs.
Nothing unusual there, you might think. We have got used to hearing such stories from airlines over the years. Some american airlines (small 'a's but also included with the big 'A's) have been in Chapter 11 bankruptcy protection, one or more times, in the last few decades.
But what is going on here?
Airlines, competing with each other but all with the same major cost element - an element whose cost is pretty consistent between them since it's a commodity traded openly on the global market.
Clearly, there are some significant opportunities to shift the cost base of an airline to be more competitive; whether from Head Office costs, purser staffing costs or food provision as a profit centre rather than a cost centre, charging for baggage etc.
But I really wonder if all of these added together are really sufficient to make the difference. Or is there a fundamental business issue at the heart of this?
I think what is really going on here is a classic pricing and yield management issue. When competitors in an industry face very common commodity costs, the relative profitability between them will likely come down to the efficiency of the pricing and yield models that they operate. Margins are tight, small differences in that efficiency can swing a company from profit to loss.
But most importantly, the overall industry margins will always tend towards the low side in these industries. Barriers to entry are pretty high and incumbents will have an advantage, and will need to leverage that as much as possible in a low margin industry.
Most interesting of course, is that not so long ago, Virgin itself was one of those newcomers, taking on BA and other competitors.