Despite lower fuel prices, airlines not reducing fares

Global Business

The price of a barrel of crude oil, currently around $46, is lower than it’s been since 2009. Drivers have seen that price reflected at the gasoline pump, but air travelers have not been as lucky. Airfares have edged up in recent months and airlines are not passing on ower fuel costs to their passengers. CCTV America’s Hendrik Sybrandy reported the story from Englewood, Colorado.

Despite lower fuel prices, airlines not reducing fares

The price of a barrel of crude oil, currently around $46, is lower than it's been since 2009. Drivers have seen that price reflected at the gasoline pump, but air travelers have not been as lucky. Airfares have edged up in recent months and airlines are not passing on ower fuel costs to their passengers. CCTV America's Hendrik Sybrandy reported the story from Englewood, Colorado.

A Falcon 2000 jet glided to a stop at Centennial Airport, and within moments a truck swooped in to begin refueling it. Although customers of Xjet, a private club for jet owners, probably don’t check the numbers closely, they’ve been getting a big break on their monthly fuel bills lately.

“The past six months we’ve seen a dramatic drop in fuel prices and really kind of in a linear way right along with the price of crude oil,” Henning Schymik, Xjet Vice President said.

Passengers who traveled on major airlines said they should be so lucky.

“I understand they still want to make their money, but still they raised their prices because of gas prices,” airline passenger Nathan Glass said. “Hopefully they can lower the prices because of gas prices as well.”

Jet fuel prices, which comprise about one-third of an airline’s operating costs, have fallen by 50 percent. However, airfares were up 2.3 percent in the U.S. in 2014. Aviation expert Jim Simmons of the Metropolitan State University of Denver said it’s an issue of supply and demand.

“The amount of competition at many airports in America has dropped because there are fewer airlines to compete in those markets,” Simmons said.

At the same time, Simmons added, planes are full. “The demand is up and the airlines know that,” he said.

Airlines are not eager to talk about the lower fuel prices and the not-so-lower airfares. A spokesman for Southwest Airlines said the company did not comment on future pricing.

Analysts have predicted that the four largest U.S. carriers will post higher profits this year than last, but Simmons does not expect them to pocket all that money. Some airlines locked in fuel prices at much higher levels several years ago as insurance. There’s also debt to pay down, new planes to buy, and new routes to open.


Transportation consultant George Hamlin discusses lower oil prices

CCTV America interviewed George Hamlin, president of Hamlin Transportation Consulting, about the effect oil prices have had on the airline industry.

Transportation consultant George Hamlin discusses lower oil prices

CCTV America interviewed George Hamlin, president of Hamlin Transportation Consulting, about the effect oil prices have had on the airline industry.