Why no flight price reduction ?

[Loftus]

Originally Posted by Dinglebert

It would be different if there was a price surcharge due to high fuel prices which they then didn't remove.

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That's because they changed the name from fuel surcharge to carrier surcharge.

[jennieg2]

Had the same conversation myself the other day. I work for a Company that is in the oil industry and so has been heavily affected by recent oil prices. Shareholders dividends come before everything else unfortunately.

[Shani]

It's called supply and demand. Where demand is high, prices will remain high. When people pay the prices, they have no reason to drop them.

[Warkman58]

I do really love the economists that see one part of a subject and demand immediate price reductions based on that single item.

Most airlines have a costs programme based upon the amount of routes they fly, the frequency of those routes, the fixed costs in terms of staffing, buildings, computer systems, aircraft leasing (in the milliions) Charter airlines such as Thomas cook have a lower cost base than scheduled airlines, as they do not fly all year round, only take staff on contract for the periods they fly and have a lot less routés to service 365 days of the year compared to Scheduled airlines.
The actual profit based costs of an Economy ticket is not in the £400-£500 per person mark, but rather in the £1,000-£1500 mark. The profit area for scheduled airlines is based around a large volume of business class and first class seat uptake, not low fare economy tickets. If you had to pay the full; cost of an economy fate then there would be a lot less travelling to the USA.
For example, the average costs just for the aircraft, (Fuel and oil costs, i.e. just your variable costs) not including staff costs, cleaning costs, landing fees, extra maintenance costs, food and drink, refurbishment, licences, etc etc the actual costs of just flying a 747 (again, not including leasing fees either) is $38.92 per nautical mile

[jas72]

Originally Posted by johnpowd

Flight companies are in BUISNESS to make money and as long as there are people willing to pay the prices they advertise then that is it.

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Flight companies all charging the same price from A to B is price fixing and is illegal in most countries

Originally Posted by Moorlandman

35%+ off the cost to fly a plane to Orlando is fuel related so there is no excuse for not dropping prices. I doubt cabin staff have received large salary increases!

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This is what I thought but apparently our fellow dibber below thinks that the 75% drop in fuel price has been offset by fewer business travellers on the planes. (Perhaps he's right).

Originally Posted by Warkman58

I do really love the economists that see one part of a subject and demand immediate price reductions based on that single item.

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It was a simple question to the dibbers and I'm not an economist just a guy who wants to fly 30% cheaper like I did 2 years ago

[Guest]

Wow. I'm guessing this thread is also full of people who think Google haven't paid enough tax... Take a very complex business, simplify it (wrongly), add in a load of assumptions (wrongly) and come up with the right answer?!?!

First, jet fuel is about the same price as 2008 - and roughly around 30% of cost of running a plane. When it was double 2 years ago (not cheaper - DOUBLE), then that would mean the cost of flying would be 15% more then, not 100% more. Take that 15% and take fuel hedging into account and you might halve it to 7.5% difference - if you were the best in the world at hedging.

So what you're really asking is: since the price of jet fuel has halved, where is my 7.5% discount? And the answer all airlines will give you is: when oil goes back up to $60-$80/barrel before you fly, will it be OK for me to charge you extra for the ticket you've already purchased at an agreed price?

Airlines are making around 6%-10% on tens/hundreds of billions of dollars on investment taken over a 20-30 year period. 15 years ago they were going out of business and needed "bailing out". Work it out!

As for "price fixing", I notice John Lewis have a TV for the same price as Tesco and Amazon. Are they price fixing? NO! They are minimising their profits to attract business without going broke in the process. Let's hope airlines do the same!

[florida2000]

Originally Posted by misterh

Wow. I'm guessing this thread is also full of people who think Google haven't paid enough tax...

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Good guess

[fredflintstone]

Originally Posted by misterh

First, jet fuel is about the same price as 2008 - and roughly around 30% of cost of running a plane. When it was double 2 years ago (not cheaper - DOUBLE), then that would mean the cost of flying would be 15% more then, not 100% more. Take that 15% and take fuel hedging into account and you might halve it to 7.5% difference - if you were the best in the world at hedging.

So what you're really asking is: since the price of jet fuel has halved, where is my 7.5% discount? And the answer all airlines will give you is: when oil goes back up to $60-$80/barrel before you fly, will it be OK for me to charge you extra for the ticket you've already purchased at an agreed price?

Airlines are making around 6%-10% on tens/hundreds of billions of dollars on investment taken over a 20-30 year period. 15 years ago they were going out of business and needed "bailing out". Work it out!

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Nice set of statistics. And of course the airlines are giving big discounts over last year, which you forgot to mention.

Last year Dublin to Mco business was coming out at 815-1000 UKP.
This year 650-800 UKP, a drop of around 20%, so yes the airlines are passing the savings on . But we have to be respectful of their cost models, so unfortunately the UK needs to have less discount otherwise the airlines will apparently go bust

[Cantcook]

Originally Posted by jas72

Flight companies all charging the same price from A to B is price fixing and is illegal in most countries

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Price fixing is illegal. Price matching is not illegal.

[AnnieB]

Originally Posted by bighal

Just because crude oil has dropped doesn't mean everything else will.. Other costs still rise year on year.
Look at this way, if fuel prices hadn't dropped the cost of your flight would most likely be more..

Also you cannot blame a business that exists to make money for its shareholders to keep doing that, it has a legal requirement to do so. Airlines, like any other business do not exist for the public but to make money for their owners. Cheaper prices for the consumers are a by-product.

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Exactly, the only reason an airline will reduce prices is to sell more seats ... if sales are good, there's no need to change the price.