We Pay Less for Gas. How Come We Don’t Pay Less for Airline Tickets?

Average tickets prices jumped ever-so-slightly this year and there’s been the usual price-tweaking since, with airlines pulling off one airfare hike followed by a second that ended in failure. Which may have some folks scratching their heads, since airlines are already making billions of dollars.

Airline Tickets and Low Oil Prices

In 2015 American, Delta, Southwest and United all made more than a billion (and some made several) thanks to the low price of oil (around $30 per barrel, compared to $145 in 2008). For most of us, low oil means cheaper gas at the pumps – but not meant cheaper airline tickets. Why are airlines keeping prices up there? Three little words: Because they can.

Demand is good, people are flying, seats are filled. The moment this changes – the moment enough people cry, “Enough!” – airfare prices will come down. At the moment, it’s not happening.

A Brief Defense of the Airlines

In defense of the airlines, they went through tough times after 9/11 and again in 2008 when several carriers went out of business in the recession. They may remember the man who once advised people never to invest in airlines; it was a dirty, rotten business he said, because airlines don’t make money. That man was Robert Crandall, legendary head of American Airlines in the 80s and 90s.

They sure making money now though, aren’t they?

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Updated: February 8, 2016