Oil price - flight costs?

NorthFin

Oil halved in price recently, and I am waiting for that to be reflected in the cost of flights?

I know fuel is not the total costs but it is a big part of the costs? Why have flight prices not yet come down?

If wait longer will the fuel price falling so much filter though to the cost of flights?

dickydonkin

You could argue the same about energy supplier prices.

Like energy suppliers, airlines will not reduce their prices at the same ratio that wholesale prices have fallen.

Airlines and any other business for that matter will be hoping to maximising profits when fuel prices are favourable and there's not a lot we can do about it.

Caz3121

information on Fuel Hedging
http://en.wikipedia.org/wiki/Fuel_hedging

I expect even if they are paying the lower rate these will not totally disappear, many airlines have renamed "fuel surcharge" to be "airline surcharge"

tripled

As an example, Ryanir has already hedged most of this year and next year's supplies...
http://corporate.ryanair.com/news/news/141103-ryanair-half-year-profits-rise-32-to-795m/?market=en
Differing airlines will have differing hedging policies, but those with longer term strategies won't be leading a cut in air fares, although they may respond to others.

Alan_Bowen

There will be no change for some time, Ryanair have hedged all of next years fuel, I think at $92 when it is almost half that now. Fuel is a major component of air travel costs but fares are based on supply and demand, and frankly the highest price the airline can sell tickets for. It was reported yesterday that Virgin Atlantic reduced their 'fuel surcharge' by £10 in December, but promptly put the fares up £20, so if you are sitting waiting for fares to fall, you may be waiting a long time.

phatbear

as previously stated its because airlines, and for that matter gas/electricity companies, buy their fuel well in advance so the price the fuel they are currently using cost them far more than it would cost them now.

also, from what i have witnessed at work, passenger loads are as heavy as ever at this higher price so why would they drop the price. airlines will charge what they want as long as people are willing to pay it