Mike981 Posted August 25, 2018 #1 Share Posted August 25, 2018 https://www.foxbusiness.com/markets/airlines-cut-back-routes-as-higher-fuel-prices-weigh After I saw this I checked my flights booked a month ago and they are over $100 more per person. That is for flights from Minneapolis to Miami in January. Just a heads up if you are holding out for better prices. Link to comment Share on other sites More sharing options...
fbgd Posted August 25, 2018 #2 Share Posted August 25, 2018 Despite aviation fuel being one of the airline's biggest expenses it doesn't nearly have as much an effect as people seem to think. The airlines are going to still try and fill the seats for the maximum amount of revenue that they can, that's the same whether fuel is $1/bbbl or $1000. Your flight going up by $100 had nothing to do with the cost of fuel. As one particular fan of the source you quoted would say, "FAKE NEWS!" Link to comment Share on other sites More sharing options...
Mike981 Posted August 26, 2018 Author #3 Share Posted August 26, 2018 LOL, okay point taken. And I trust you know than I. BUT, the fact of the matter (to me) is that they will use the price of fuel as a reason to raise prices to the point people are willing to pay and still fill their planes. Link to comment Share on other sites More sharing options...
Rare FlyerTalker Posted August 26, 2018 #4 Share Posted August 26, 2018 LOL, okay point taken. And I trust you know than I. BUT, the fact of the matter (to me) is that they will use the price of fuel as a reason to raise prices to the point people are willing to pay and still fill their planes. Does the "reason" matter?? It's market forces at work, with all of the myriad factors in play. Who cares what the PR spin says? Link to comment Share on other sites More sharing options...
johnandlinda Posted August 26, 2018 #5 Share Posted August 26, 2018 Airfare should have been very cheap then when we had record low oil prices! Yeah right! Link to comment Share on other sites More sharing options...
CruiserBruce Posted August 26, 2018 #6 Share Posted August 26, 2018 Airfare should have been very cheap then when we had record low oil prices! Yeah right! Did the fixed cost of putting your airplane seat in the air decrease when oil prices were low? The salaries for the pilots, flight attendants, ground staff and mechanics? The gate and airport fees? The maintenance costs? The cost of buying or leasing that airplane? These are huge parts of why airfares are what they are. Fuel moves varies one cost, but these other fixed costs are huge. Love it when people think any business should and would put something out there for a 1 cent profit margin, when the market determines they could sell for a $10 or $20 profit margin. That is how the market works!! Link to comment Share on other sites More sharing options...
johnandlinda Posted August 26, 2018 #7 Share Posted August 26, 2018 I understand fully about fixed costs! My point is if oil prices go up the first thing they do s raise prices, never reduce if they come down. Just like gas for the car, prices always go up faster than they come down when oil prices fluctuate. Link to comment Share on other sites More sharing options...
CruiserBruce Posted August 26, 2018 #8 Share Posted August 26, 2018 (edited) I understand fully about fixed costs! My point is if oil prices go up the first thing they do s raise prices, never reduce if they come down. Just like gas for the car, prices always go up faster than they come down when oil prices fluctuate. "Never reduce"? I think you would have a lot of difficulty proving that. I watch our gas prices regularly. They move both ways, daily. We fly to Hawaii several times a year. I would say our fares in the last two years are about the lowest, on average, compared to the last 20 years we have flown to Hawaii. A lot of that has to do with competition. I would curious to see exactly what portion of a given fare is fuel cost. If it is, say, 20% ( a number I think is high), a increase of 5% (strictly in the cost of fuel)would hardly be noticeable in the airfare. So, for a $300 airfare, where $60 is fuel, a 5% fuel cost increase would be $3. Edited August 26, 2018 by CruiserBruce Link to comment Share on other sites More sharing options...
fbgd Posted August 26, 2018 #9 Share Posted August 26, 2018 My point is if oil prices go up the first thing they do s raise prices Apart from they don't... (I assume by "they" you mean the airlines) Airfare should have been very cheap then when we had record low oil prices! Yeah right! Historically speaking fares have never been cheaper. Love it when people think any business should and would put something out there for a 1 cent profit margin, when the market determines they could sell for a $10 or $20 profit margin. That is how the market works!! Exactly, airlines aren't charities. The way I have explained it before is to assume you are an owner of a company that makes widgets. It costs you $5 to make a widget that sells for $10 and you sell every widget you make. If your costs for widget production drop by $2/unit would you then sell them for $8 if the market sustains a $10 retail pricepoint? Of course not, you pocket the difference. If the airlines are the greedy corporate machines many seem to think they are then the quickest and fastest thing to do it to start buying shares and reap those juicy rewards...oh wait... Link to comment Share on other sites More sharing options...
Globaliser Posted August 26, 2018 #10 Share Posted August 26, 2018 My point is if oil prices go up the first thing they do s raise prices, never reduce if they come down. Just like gas for the car, prices always go up faster than they come down when oil prices fluctuate.I think your prejudices are showing. All of this is untrue. Link to comment Share on other sites More sharing options...
em-sk Posted August 26, 2018 #11 Share Posted August 26, 2018 I understand fully about fixed costs! My point is if oil prices go up the first thing they do s raise prices, never reduce if they come down. Just like gas for the car, prices always go up faster than they come down when oil prices fluctuate. Yes, but there are also other factors at play. Jet fuel is such a large cost for airlines that they have people dedicated to buying and negotiating forward contracts. They may fix in the cost of jet fuel for a number of months into the future. Jet-A fuel is basically kerosene. Also refined from crude oil but with slightly different market dynamics. So its price will move with crude oil but not necessarily in lock step. The airlines generally have been replacing old aircraft with more fuel efficient aircraft and increasing the number of seats. Link to comment Share on other sites More sharing options...
iancal Posted August 27, 2018 #12 Share Posted August 27, 2018 I would expect that airlines, like cruise line, use fuel futures/future pricing to protect themselves to a certain degree. They probable hedge fuel in a similar fashion to currency. Link to comment Share on other sites More sharing options...
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