Airlines dropping prices--just not in the US

Posted at 9:21 AM, Jan 21, 2016
and last updated 2016-01-21 14:49:42-05

The price of oil tanked again Wednesday. But don't think you'll see that cost savings for airlines passed on to passengers.

Unless you fly on Japanese airlines.

Travel website Skiftreported this week that Japanese airlines are dropping fuel surcharges as long as the price of oil stays low. It estimated the extra fee added as much as 66,000 yen ($563) to the price of a round-trip ticket to the U.S. or Europe.

So why not U.S. carriers? They posted record profits in 2015. 17.9 billion in net 3Q profits according to the Department of Transportation.

AAA travel expert Amy Moreno said airlines don't typically adjust fees based on fuel costs. Moreno said they buy fuel in advance, so the price we're paying today isn't the price they're paying.  

So, will carriers drop future prices since they're getting fuel on the cheap now?

"No," Moreno laughed. "I have not seen any significant drop in price ever due to gas. You see more drop in price based on supply and demand."

Moreno said when less people are flying and planes aren't so full, you see a surge in specials from carriers.  Watchdog group said airlines do adjust fees based on fuel prices...if it benefits the carrier.

"When oil prices rose to over $100, airlines raised prices based on this, when they declined over 70% since July  2014, airlines folded their surcharge increases into their regular prices," countered Paul Hudson from "If gasoline prices were to follow the same pattern, prices at the pump would still be over $4 per gallon. But unlike airlines, oil companies are prohibited from price gouging."

Trade group Airlines for America, which has nine members including United, Southwest and American, defended the profits airlines made in 2015 saying airlines lost $10 billion in 2004 and $28.6 billion in 2005 and 13 carriers filed Chapter 11.

"As with any consumer product, it's the marketplace that ultimately determines the price, rather than the cost of any one input," said Melanie Hinton, managing director for Airlines for America.  “It’s important to note that while fuel expense was down 35.8 percent through the first nine months of 2015, total operating expenses for airlines were down only 8.8 percent, with revenues flat."

Hinton also pointed out ticket prices in 2015 were down 5% at the end of 2015. 

Jet fuel, like gasoline, comes from crude oil which was less than $27 a barrel Wednesday, a 13-year low.