Airfare Ticket

Cheaper Fuel Could Mean Drop in Airline Ticket Prices

Airfare Ticket

While you’re saving money at the pump right now, it might be a few months before you notice cheaper airline ticket prices.

After paying nearly $4 for a gallon of gas for several years, experts said most people probably aren’t changing their travel plans right away — even though prices have been cut in half.

“In the near term, there’s not much change except the extra cash in your pocket. In the longer term, habits do change,” Purdue Energy Economist Wally Tyner said.

A habit that may change is how much people travel. Speaker’s Travel president Jon Speaker said if gas prices stay low more people may decide to plan a vacation.

“If fuel prices hover at this $1.80 to $2.00 mark, you could see an increase in travel because it’s very reasonable to get in the car and drive down to Florida or any of these destinations that families like to go to,” Speaker said.

If you prefer to fly, Speaker said it may be a few months before you notice a change in ticket prices.

“We can see an impact, but usually it’s going to come down the road. A lot of the airlines purchase fuel in advance, so what they’re flying on now they probably purchased five or six months ago,” Speaker said.

“So, they’re still paying the higher prices,” Tyner said about airline companies. “But as those hedges unwind, as they lock in new contracts, the new contracts are going to be at the lower prices so their costs are going to go down.”

Tyner said another factor may further delay a drop in airline prices.

“Airlines right now are facing high demand, most of the seats on most of the planes are full. So even if their costs or when their costs go down, the ticket prices may not fall as fast,” Tyner explained. “Eventually, they will fall.”

Tyner said when it comes to the travel industry, bus tickets might be the first to drop. Speaker said when gas prices started to increase nearly a decade ago, motor coach companies added a seven to 10 percent fuel service fee. He said so far, they’re not going anywhere.

“Those fees are still on there,” Speaker said. “I believe that for transportation companies that’s a source of revenue for them. Unless there is a big push from the consumer, I don’t think they’ll remove them.”

Experts said it’s not clear how much prices will drop for flights or motor coaches. They said it all depends on how long cheaper gas prices stick around.

More… http://wlfi.com/2014/12/29/cheaper-fuel-could-mean-drop-in-airline-ticket-prices/

Leave a Comment