Oil Prices and Air Fares

With oil prices dropping, has anyone seem a correlating drop in air fares? They are still sky high here in Hawaii. I thought the airlines explained the price hikes because oil and fuel prices were high. So what's their explanation now?

The airlines lie.

It takes them some time to reflect the drop in oil prices. They aren't as quick as gas stations that reflect the prices within days. The last time we had a large spike in oil prices, we read about how SWA had hedged their fuel costs by buying futures on the commodities market. However, this time, I haven't read or heard a word about SWA hedging, and their prices for airfare have really been up there this year!

Airline prices are based on supply/demand of the seats - not the price of oil. I guarantee you wont see a price drop until fewer people are flying..or more planes go online.

I have been tracking airfares on Southwest for a Vegas trip in December. Damn, I have never seen fares so high. I was hoping that with the price oil dropping, air fares would come down. No way!

It is pretty evident that air fares do not have much to do with the price of oil. Airlines have no reason to lower fares. More people are still flying even with higher fares and fewer flights. The price of oil drops and they still keep fares high. It is a win, win situation for the airlines.

There is no doubt that the higher fares with make me fly less. Instead of my usual three trip to Vegas per year, I think there will only be one or two. They are pricing me out of the market.

PJ's reponse is correct. The planes are full, so the airlines charge more. They also don't make much profit; American Airlines is bankrupt.

However high prices will cut down on vacation travel (myself included), which creates problems further down the food chain as vacation destinations get less traffic & their profit margins get squeezed.

No doubt when you travel and from where has a lot to do with fares, however, recently found fares on SW that were amost half of what they were posting earlier. Certainly not cheap but you can get lucky with some persistence. Like you I used to make it out there 3 times a year for a while but of late have just cut back on the trips and just go local.

I wish I could hedge the way the Airlines do but I dont use that much, relativly. Jet -A has been high for over a year now though nothing like it was several years ago. That was followed by a big fall in prices. The airlines didn't reduce their fares then either. For the last year it has been pretty steady despite the swings in crude prices. The airlines pay a lower, and because they hedge, steadier price for fuel. That doesn't mean that fuel cost don't reduce their revenues, but it doesn't swing their cost' like auto gas at the pump.

dobot, as others have said and especially from Hawaii, it is all supply and demand. the airlines will keep prices high if they find that sales is strong and seats fill up but will lower them if the seats are empty. supposedly with the improving economy more people are flying so you have to contend with the vacationers to/from Hawaii so it seems like the airlines are keeping the rates high. With the start of allegiant air to hawaii and more flights to hawaii with alaska airlines and the possible start up of SW in the Hawaii market I'm hoping that it will create a fare war and keep prices down but we will have to see.

I usually make "mock" reservations every so often, checking with airline sites like Hawaiian and others for about the time I want to travel. I check specific flights and specific days and check out how many seats are open on those flights. If there are a lot of open seats I usually wait, a lot of times the airlines will lower their rates or have a one day sale to try to fill the seats. If seats are filling up I usually either book the flight or else look at seat availability for different days. That is a crap shoot though, it is always possible that a travel agency can "block" a bunch of seats and so the prices will go even higher so you have to gamble on whether prices go down or not.

Luckily Hawaiian seems to have seasonal specials and so drop their rates for a few days. You have to act fast and book as the seats fill up fast and the prices go back up quickly. They had a fare sale about a month and a half ago, r/t prices to sf for example was in the low $400's but now in the $600 range. Just have to wait it out for the specials and book fast.

Airfares from St.Louis to Vegas a few weeks ago were $121 each way. I could't nail down dates to get away, now it's $211 each way.

Ray