The price of oil goes down, and it’s cheaper to fill up the gas tank. It’s also cheaper to fill up an airplane.

Jet fuel makes up 25% of the cost of flying you somewhere. Logic would say that when oil prices plunge, there ought to be some savings on airfares, right?

The United States government prohibits airlines from adding fuel surcharges to domestic tickets but not on international tickets. Take a $1,300 round-trip ticket to Europe. The base fare may be less than $300 round-trip, but the fuel surcharge may be as much as $900 round-trip. Add in government taxes and fees and you get your $1,300 fare.

The exception is frequent flier award tickets. Some airlines hit you with fuel surcharges of hundreds of dollars on international “free” tickets.

So why do airlines bother to play this game of fuel surcharges? Because it matters on the 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 big discount. And those discounts typically apply only 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. And guess what? The airlines won’t.

Be prepared for prices to stay high, regardless of what oil prices do.

By Scott McCartney for PeterGreenberg.com