Wolfgang5150

Hello:
Just wondering what the experts think the drop in oil prices (and hopefully continuing), will have on air fares in the next few months. Not sure how far out the carriers buy fuel etc.
I'm looking at a Europe trip in the spring, and watching fares regularly...just curious.
Thanks.
Kevin

fotographer

I am no expert, expect for filling up my car, dont think you will see a drop in ticket prices,
I believe on the news this morning, DL has already raised ticket prices around 5%....sure most other airlines will follow

Shareholder

Such macro moves seldom impact micro decisions. It is unlikely we will see a drop in fares or even fuel surcharges unless prices remain at the $80 level for more than six months. Most airlines buy futures contracts and these can extend quite far into the next year.

Of course, fares seldom reflect core costs of operating and can vary significantly from month to month, week to week depending upon general market conditions, route competition and forecast load factors. Fares from NAmerica to Europe vary considerably depending upon the cities yours flying from and going to. Just don't expect logic to prevail when it comes to airline fares.

CDKing

Its a multi year cycle that evens out in the end. They need to keep the prices the same when the cost of fuel goes down to offset the prices when it goes back up.

JDiver

As this is a topic that (theoretically) broadly affects all airlines (and how one or two airlines' changing pricing may affect others'), we'll move this to a broader coverage forum for wider input and discussion.

JDiver
Senior Moderator

84fiero

Not sure how many true experts on airline pricing and/or fuel prices we actually have, but there are many who at least those who fancy themselves experts Already a couple of threads speculating on this subject:

http://www.flyertalk.com/forum/trave...ir-travel.html

http://www.flyertalk.com/forum/trave...base-fare.html

RooseveltL

I posted another message on the topic before this thread was moved to TravelBuzz.

Airlines announced a price increase this AM following the lead of JetBlue. Oil at its lowest cost in years so the theory it would result in flatline pricing is not accurate unless this increase doesn't stick.

Wolfgang5150

thanks - didn't see those other threads....find the oil market fascinating actually.......

pinniped

In markets with real airline competition, it's probably good news for travelers if jet fuel drops and stays there long enough for airlines to benefit.

In markets with little real competition and a pro-merger judicial branch, I expect airlines to raise their prices by about five percent...today, in fact.

GUWonder

You got it. In an oligopolistic market with a government inclination more in favor of large corporate cartel players and against consumers, prices will tend to be stable or rise even if oil-related costs for the cartel players decline.

If anything, the oil price drops will lead to a more immediate increase in air travel costs as demand for air travel will increase as more consumers end up with more money for air travel as their costs for daily ground vehicle transport and heating needs drop.

Only de-cartelization and/or a material increase in de novo suppliers' capacity in the market would make the kind of substantive difference where a drop in suppliers' input costs would be followed by a higher chance of lower prices for consumers.

Tchiowa

As someone who has been in the oil business for 3 decades and knows how oil prices are established, my only response to you is: "Hogwash".

If you'd like an education about how oil prices are established I'm happy to oblige. But, for the record, the big boys (oil companies and governments) neither set nor control prices.

CPRich

And as someone who spent a few years on the trading floors in Houston, I concur.

(but facts never seem to phase the Big * folks)

Tchiowa

What we won't tell everyone is that it's primarily *you* causing the price spikes and dips.

pseudoswede

As oil prices decrease, fuel surcharges will decrease; but base fares will increase.

As oil prices increase, fuel surcharges will increase; but base fares will decrease.

zerolife

Disagree, not what I'm observing. It's more like:

As oil prices decrease, fuel surcharges will stay the same; but base fares will increase.

As oil prices increase, fuel surcharges will increase; but base fares will stay the same.