Fuel prices have plummeted lately, which is good news all around. That being said, it hasn’t had the impact on airfare that some people were expecting.
Why airfare hasn’t gone down despite fuel prices going down
The most common question this has raised is why it hasn’t resulted in lower airfare. And that answer is surprisingly simple — because the cost of airfare isn’t really tied to the cost of providing it. Instead, like most things in the world, it’s based on what price the market can support.
In other words, when oil prices were super high and the economy was crap, that didn’t somehow give the airlines the power to raise prices. Instead, a lot of them went out of business, capacity was cut, etc. So it’s no surprise that airfare hasn’t gone down, and that airlines are making billions of dollars. The market will eventually equalize itself, though. This game is cyclical — for us, and for the airlines.
That doesn’t explain fuel surcharges
As far as I’m concerned, the real question is why fuel surcharges haven’t been lowered. I wrote a post about this just a few weeks ago.
To some degree this is semantics. Lowering fuel surcharges wouldn’t actually change the fare consumers pay, as the base fare would just be increased accordingly. And that’s fair, because the fuel surcharge isn’t intended to reflect the cost of fuel anymore.
The major implication is for those booking award tickets. Many airlines impose fuel surcharges on award tickets, and when those are disproportionately high, you’re paying a lot of cash for award tickets in some cases.
That’s probably one of the reasons that many airlines have changed the verbiage on these fees from “fuel surcharges” to “carrier imposed surcharges.”
Japan Airlines lowering fuel surcharges
While the practical implications aren’t huge, we do have to give one airline credit for lowering fuel surcharges. Japan Airlines will be lowering their fuel surcharges for tickets booked on/after February 1, 2015.
Via a Japan Airlines press release:
El Segundo, CA – Information as of December 9, 2014;
JAL introduced fuel surcharges in February 2005 in response to rises in the cost of fuel. If the fuel price fluctuates further, we will amend or delete the fuel surcharge on a bimonthly basis. (Please click here for further details of the revision.)
The following surcharge applies to flights operated by Japan Airlines and JAL code-share flights operated by other airlines.
The fuel surcharge for tickets issued on/after February 1, 2015 will be amended as shown below.
We highly appreciate your understanding and cooperation.
Here are their current fuel surcharges for travel to/from the US:
While here are the fuel surcharges for tickets issued on/after February 1, 2015:
As you can see, those are pretty sizable decreases in fuel surcharges.
If only other airlines did the same… I’m looking at you, British Airways!