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FYI - Jet fuel is 36.5 percent higher than it was a year ago


Mike981
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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!"

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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.

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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?

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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!!

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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 by CruiserBruce
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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...

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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.
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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.

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