Does the Price of Oil Affect the Price of Your Plane Ticket?
If oil prices decrease, does that mean you can save on airfare? Unfortunately, no. Scott McCartney, Travel Editor for The Wall Street Journal, explains why that’s not the case in this segment from The Travel Detective.
The price of oil goes down, and it’s cheaper to fill the gas tank. It’s also cheaper to fuel the airplane.
Jet fuel makes up about 25 percent of the cost of flying. Logic would say that when oil prices plunge, there ought to be some savings in airfare.
The U.S. government prohibits airlines from adding fuel surcharges to domestic tickets—but not on international tickets.
Take a $1,300 round trip ticket to Europe, for example. The base fare may be less than $300 round trip. The fuel surcharge may be as much as $900 round trip. Add in fees, and you get your $1,300 fare.
The exception is a frequent flyer reward ticket. Some airlines hit you with hundreds of dollars in fuel surcharges on international “free” tickets.
So why do they bother to play this game of fuel surcharges? There are big discounts that airlines negotiate with corporations for their business travel.
If a big company agrees to give a lot of its business to one airline, the airline gives the company a large discount. Those discounts typically only apply to base fares and don’t cover surcharges and fees. So if you call it a fuel surcharge, airlines typically don’t have to discount it.
But guess what? They won’t. Be prepared for airfare prices to remain high—regardless of oil prices.
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