Why don't lower fuel costs mean lower airfares?


JACKSONVILLE, Fla. – Oil costs have dropped to about $40 per barrel -- the lowest they've been since 2009 -- but the effects aren't being seen when it comes to airfare costs.

Travelers at Jacksonville International Airport had mixed reactions Monday.

"I think that the airfares are reasonable," Joe Van Wingerden said.

"They're expensive, of course," Martin Lorio said.

But all the travelers had the same question: With oil prices going down, why aren't airfares going down as well?

"I would have thought that when gasoline prices and fuel prices start dropping, that the airfare prices would've dropped as well, and they're not," Brenda Lorio said. "I checked even further out and the flights are still the same price. Why?"

Local travel expert Scott Lara, manager for Air Sea Travel, said the most common issues are fixed oil prices.

"Just like cruise lines, airlines buy oil six months (to) a year in advance at a certain price," Lara explained. "So (even) when oil comes down, that means necessarily that prices won't go down (because the oil price for airlines is already set)."

Another reason, Lara said, is lack of competition.

"Years ago, there were lots of airlines, lots of competition, but since the airlines have consolidated, there's less competition, which means less savings for consumers," Lara said.

The U.S. Department of Justice is still investigating allegations of price-fixing among airlines, including Southwest, American, Delta and United. The issue is whether the airlines are coordinating to keep a certain number of seats on a plane and raise prices.

Oil prices are expected to continue to fall. Gas could hit $2, but travelers shouldn't expect a change in airfare.

"Unfortunately airline prices aren't coming down anytime soon," Lara said. "Airlines love the high profit to the shareholders, and that's the way it's going to be."

Searching for cheaper flights might be nearly impossible, but the best advice to go by is to book as far in advance as possible, experts said.