“Fight Against Stupidity And Bureaucracy”
Yesterday I wrote a short post about the over-supply in the oil market and how the price has fallen and likely to remain at lower levels for a while – major global catastrophes excepted of course.
The strange thing is – a little bit of sarcasm there, it’s not really strange at all – is that the substantial fall in oil prices has not led to the consumer paying less for their air fares. Gas prices for your car have come down, but the cost of your ticket on the airlines hasn’t. In other words air travelers – suckers like me – are paying the same for a ticket as we were before the oil slump.
I smell a bit of profiteering going on. More than a bit actually. Not to mention collusion between the bigger airlines to keep their ticket prices inflated.
Of course the big airlines counter with arguments like they have to buy their fuel well in advance and therefore they bought at the older, higher price. That may well be true but they are also buying right now at the much lower price which should more than compensate and mean a drop in ticket prices.
Yes – but I mean, no – don’t be silly, the poor airlines have had to invest a lot of money to upgrade their services, fleets and infrastructures.
I would believe that more if I weren’t still traveling on the same clapped out airplanes with wonky seats squashed up against each other in the sardine like manner we have come to hate but endure. On top of that we, the customers, now have to do most of the work for the airline staff like checking ourselves in, printing our own luggage tags, and so forth.
It is remarkable that not only does a significant drop in fuel costs lead to the same or higher airfares, but the much heralded mergers that we are told will increase efficiency and decrease costs also mean the same or higher air fares too.
What these consolidations, or mergers, really do is to reduce competition – there are only four major US airlines American-US Airways, Delta, Southwest and United – and allow airlines to set prices with little fear of being undersold. And in any case, what most of the public do not know is that airlines don’t price their flights based on their cost, they price it based on demand and demand does not seem to be very price sensitive.
It’s one of those heads they win tales we lose scenarios. So don’t hold your breath for anything more than a token drop in airfares in the near future.