Expensive oil means expensive airfare. So why doesn't cheap oil mean cheap airfare?

This is what happens when competition goes away

plane flies under dark grey sky
(Image credit: Christopher Furlong/Getty Images)

Watch out, American Airlines' CEO Doug Parker warned on Sunday: Higher oil prices could lead to higher ticket prices.

Oil is still way down from its pre-2014 high. But it has also risen about 50 percent in the last year. "If it becomes clear this is the new normal you would see over time less capacity and growth in the industry and therefore higher prices," Parker told reporters. He's been repeating a similar theme since at least April: "Oil is our second largest expense," Parker told an earnings call in April. "So when it increases, the cost of air travel increases."

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