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Airline Prices Refuse to Fall Despite Low Fuel Prices

Plane Being RefuelledFuel prices have been plummeting as of late. This is great news for people who drive, but what about the people who fly? Are they seeing lower fares? While airlines are reporting higher-than-expected profits, fares are not dropping despite lower fuel prices.

In the United States, this has prompted Senator Charles Schumer to ask for a federal investigation into the airline industry. He wants to know why fliers are still being hit with high fares despite the fact that fuel prices are dropping. Tickets this holiday season are growing out of control, and there doesn’t seem to be any relief in sight.

In 2010, fuel prices were more than $100 a barrel. Now they have dropped to just $60 a barrel. This should mean that fuel prices across the world are falling. Unfortunately, airfares for most airlines are actually up 10 percent for the holiday season. This is over the five-year inflation level.

Schumer questioned why prices are going up? It seems really unfair to travellers. It’s safe to say that airlines are able to afford to pass some of the savings on to consumers. At the very least, they can stop increasing prices.

Thanks to lower fuel prices, airlines are set to make a combined $20 billion this year. In 2015, they are expected to make even more, at $25 billion, according to the International Air Transport Association. Each airline should make a net profit of around $7.08 per passenger next year, which is up from the $6.02 per passenger they made in 2014. In 2013, airlines only made around $3.38 per passenger, making this a huge increase in just two years.

Airlines, however, say that their profit margins are still very fragile. This is mostly because of the political unrest that seems to be affecting different areas around the globe. Additionally, health scares have been cutting into their profits. Airlines also pointed out that the expected price of round-trip tickets will be around 5 percent lower next year.

Despite all of this, Schumer said that it’s still not enough. He pointed out that ticket prices should not be shooting up like they are. Airfares always seem jump as fast rockets, but they come down as slowly as feathers.

When the price of oil jumped to more than $100 a barrel, it was only natural that airlines made up for this extra cost by increasing prices. They increased prices extremely quickly to ensure that they didn’t lose. Now, with prices dropping quickly, airlines have been less than quick about dropping prices. In some cases, airlines have even increased prices.

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