Falling Oil Prices Prompt One Airline to Lower Airfares

Unfortunately for U.S. travelers, the airline cutting fares is a Russian carrier – Transaero – but with oil currently as low as $55 a barrel*, can other carriers be far behind? We put the question to analyst Rick Seaney, CEO of FareCompare.

*Price as of Dec. 23, 2014

No Incentive for U.S. Airlines – Yet

“The ball is rolling,” said Seaney, “but only outside America’s shores.” He pointed to Transaero’s cancellation of all fuel surcharges embedded in its international tickets, a savings of roughly $45 to $60 on the London-Moscow route; then there’s the Matson shipping company’s decrease in fuel surcharges on voyages to Hawaii, Guam and elsewhere. So what about U.S. airlines?

Where U.S. Airlines May Drop Prices

A media report says Sen. Charles Schumer of New York is calling for a federal investigation into why airfares aren’t dropping with the fuel prices, but as analyst Seaney has pointed out, right now there is no incentive for U.S. airlines to drop prices since demand remains steady.

However, if there are near-term price drops, they’re most likely to affect the $450 round-trip fuel surcharges to Europe and Asia, and Seaney suggests travelers to those regions be patient. “For the next three months, keep your eye on airfares and news about oil prices,” said Seaney, adding that signing up for airfare alerts is a good way of staying on top of things.

“If airlines start to get religion on fuel in January or February,” said the analyst, “there might even be movement on the domestic front but do not expect any deals for President’s Day weekend or Spring Break.”

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Updated: January 2, 2015