Over the past year, U.S. airlines have saved over a billion dollars on jet fuel. Since it is their largest expense, some may expect that falling fuel prices will amount to less expensive air travel and improved flight experience. However, such optimistic ideas may not get far off the ground.
It’s actually projected that fares and all of those extra fees will continue to go up. Why is this the case?
“In the past six years, airlines have done a great job of adjusting the number of flights to fall just short of demand. As a result, those who want to fly will pay a premium to do so. Airlines are selling a record 85.1 percent of their domestic seats. Thanks to several mega-mergers, four big airlines control the vast majority of flights, leaving very little room for another airline to undercut fares.”
Rather than giving customers a break, airlines will be more likely to reinvest in new planes, and terminal improvements, which will likely include new computers and other technology upgrades. The past few years have already amounted to historic aviation spending with orders for 10,000 new planes being sent to Airbus and Boeing.
Are you surprised by these numbers in airline fuel savings or where that money will end up being spent? Tell us what you think in the comments.