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Why Airfare Isn’t Reflecting Low Gas Prices

The past few months have seen a significant decrease in the prices of crude oil on the market. While commuters across the United States have seen these low prices reflected in the cost of gasoline – saving upwards of $1 to $2 per gallon of gas – these low prices have yet to make a significant impact on the airfare charged by airlines, and this is especially true of American-based airlines.

Some airlines, such as Singapore Airlines, have begun to lower their fuel surcharges anywhere from $5 to $83, depending on the class and distance of the tickets purchased. In comparison, recently reported that airfare prices have fallen up to 3 percent compared to spring break of last year.

Lack of competition in the US air market caused by too few competitors is one explanation for why airlines in America are not feeling pressured to offer travelers airfare at adjusted prices. Other economists argue that the lack of low-oil kickbacks to customers is due to a lack of stabilization in the oil market. Until the prices of fuel stabilize, all travelers – regardless of class – can expect to be charged airfare with a higher fuel surcharge.

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