Here's why airline ticket prices are rising even as oil prices tank

Here&#039;s why airline ticket prices are rising even as oil prices tank

(Image credit: Peter Macdiarmid/Getty Images)

last updated 8 January 2015

Dropping oil prices mean that gas prices have fallen — you probably noticed — and airline fuel costs, too. In fact, airlines are saving tens of millions of dollars a week. So why aren't they sharing the wealth through lower fares? The short answer, says The Associated Press' Scott Mayerowitz, is that they don't have to: "Planes are full. Investors want a payout. And new planes are on order. In fact, fares are going higher."

U.S. airlines had a rough time in the 2000s, and they made up for shrinking revenue by nickel-and-diming customers with new fees and reduced services. Those baggage fees aren't going away, Mayerowitz says, and ticket prices will probably stay high because airlines have gotten really good at limiting flights to just fewer than demand, keeping airplanes full (or, if you're a passenger, crowded).

Don't like it? "Thanks to several mega-mergers, four big airlines control the vast majority of flights, leaving very little room for another airline to undercut fares," Mayerowitz says. Airlines are reinvesting some of their rising profits in new airplanes and other capital improvements, so there's that.

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In any case, Americans seem to be resigned, said research firm J.D. Power earlier this year. "It isn't that passengers are satisfied with fees, it's that they are simply less dissatisfied because they realize that fees have become a way of life with air travel," said J.D. Power's Rick Garlick. "Passengers are over the sticker shock of being charged more to fly, having to pay for checked bags, expedited security clearance, or for preferred seating."

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Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.