As oil prices plunge, airlines continue to lie about fees

by Christopher Elliott on October 7, 2008

Oil prices dipped below $90 a barrel yesterday — roughly the same price as a year ago, before airline charged passengers for everything that wasn’t bolted down on their planes. Energy costs, the stated reason for all of these new fees, are expected to fall further this week. But are the new surcharges here to stay?

Like you have to ask.

The domestic airlines continue to maintain that oil prices are the only reason we’re paying $15 or more for the first checked bag or a fee for a “free” award ticket. When pressed, they change their tune and blame it on fuel price volatility.

No two ways about it: We’re being lied to.

Airlines were simply waiting for an excuse to impose these new fees. Now that the price of fuel has fallen back to earth, most airlines have no intention of backing down. Why? Because they’re making hundreds of millions of dollars from these annoying ancillary charges.

There’s only one solution: The government should follow Europe’s lead and compel airlines to quote a fare that is all-inclusive.

My colleague Janice Hough reported yesterday that American Airlines wants to “unbundle” its fares starting in 2009, which would essentially mean that it would quote a low “base” fare and then start piling on the surcharges.

Needless to say, that wouldn’t be in the best interests of the traveling public.

With energy prices falling, it’s time for the airlines to come clean about their pricing. If they can’t, maybe the government should help.

Print Friendly

Tagged as: airlines, energy, Oil, prices

  • Geoff

    You pay what the going rate is for the airline ticket. It’s just like the stock market, are the rates going up today or down next week. There is very little to due with oil costs, just an excuse. If you can go from Pittsburgh to Honolulu for under $500.00 per person, then why is Clarksburg WV to Wahington DC $583.000? 7,000 miles against 450 miles. These are regular fares that have absolutely nothing to do with oil! You need to know when to get in your car to save money. The Columbus and Cleveland markets along with Baltimore and Dulles are attractive Eastoast airports. I would have put Philly in there, but nobody wants the delays there.

  • Tim

    Have you ever thought about the fact that it’s the same with gas prices for your car. Just because the price of oil has dropped doesn’t mean the cost of the fuel goes down. Example: the price of gasoline should be about 1.50 with oil around $90 dollars a barrel, it’s not. Do you really think it’s any different with jet fuel? Easy to point fingers at someone when you don’t have the whole story. The crack spread is $108.93 a barrel for jet fuel as of yesterday the price of a barrel of oil was 90.06. Someone needs to look into the fact that the price of gas has not gone down any faster, make one think.

  • http://www.singleparenttravel.net John F

    I think it has more to do with the credit crunch. As it is now, the airlines have a pretty decent deal with the credit card companies. But if credit crunches up as it is supposed to, the airlines will lose that sugar deal. This is what forced Frontier (I believe) into bankruptcy. What will UA do if all of a sudden the merchant account decides that there likely will be more chargebacks and fraudulent charges and tells UA that they will only allow them to process $250,000 in charges per day. (I have no idea how much they process but I imagine it is a LOT more than that on a daily basis). Well, if UA wants to keep selling tickets and flying, they will need to figure a way to fund the overage.

  • Frank

    SAME STORY……………..Different day.

  • Craig

    Well, there are too many variables to the story. For one, just like Southwest did a year ago, some airlines will lock into a fuel contract for a set number of months (or years) and Sourthwest was smart and got a good deal. So maybe American locked into a deal a couple of months ago at a very high rate, hedging that prices would continue to go up, but, oops, they fell instead – but they still have to pay the contract price.
    It is no different than at a gas station. The owner (not an employee of the oil company) has to bid on the price – might hit it, might not. When his price goes up, the pump price goes up. When his price drops, he might hesitate, since his contract next week might go up again and he doesn’t want to loose money again.
    Food prices do the same thing and I am sure there is a blog out there somewhere where someone is complaining that the price of feed for chickens went down, but the price of eggs is still too high.

  • http://m/internetexplorer joseph willis

    just saw ad fligh thartford to boston, $1345 its a 2 hour ride via peter pan $70 what a deal ???

  • Ed Kummel

    The same thing happens with taxes…On April 28, 1898, the United States declared that a state of war exists between the USA and Spain. In order to fund that war, a 3% tax was placed on telephone services. And while it changed it’s name over the years, this same tax stayed in place until sometime in 2006 when it was repealed for good. That’s a 108 year tax…Hmmm, so taking this as a metric, it should take the airlines only another 106 years for them to remove the fuel surcharge from their ticket prices.
    Ed
    web/gadget guru

Previous post:

Next post: