The Interpreter Posted May 25, 2008 Share Posted May 25, 2008 ...and if you don't think this affects the amusement industry, you probably also believe high gasoline prices benefit regional, seasonal parks: http://www.thisismoney.co.uk/news/article....mp;in_page_id=2 Quote Link to comment Share on other sites More sharing options...
Guest kwindshawne Posted May 25, 2008 Share Posted May 25, 2008 I am glad I booked when I did. The cost of airfare to Alaska has doubled in the past 4 months. If I had waited much longer, it wouldn't have been possible. I do not plan to ever fly again after this trip, however. Quote Link to comment Share on other sites More sharing options...
BavarianBeatle Posted May 26, 2008 Share Posted May 26, 2008 So, The British government is imposing a controversial tax..... You would think they would have learned about the consequences of that in the 1770's...... 1 Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted December 20, 2015 Author Share Posted December 20, 2015 Fuel prices are currently waaaay down. So, air fares? Uh.....no. 4 Quote Link to comment Share on other sites More sharing options...
Thrill_Biscuit Posted December 20, 2015 Share Posted December 20, 2015 Supply and demand, I guess. The consternation of flying is still palpable, even after fourteen years, and someone's gotta pay for the Thousands Standing Around... 1 Quote Link to comment Share on other sites More sharing options...
Oldschool75 Posted December 20, 2015 Share Posted December 20, 2015 Someone is going to bring this up in front of the government. I'm sure there will be a congressional investigation. The Airlines said the cost of gas went up, so ticket prices go up. Well gas is down, what's the current excuse? Maybe they are busy creating a new fee to jack up the rates again after they are called out for the still lingering high prices. 4 Quote Link to comment Share on other sites More sharing options...
calakapepe Posted December 20, 2015 Share Posted December 20, 2015 Maybe some carriers have deals where they pay one price regardless of it rising or falling? I wouldn't have a slightest clue Quote Link to comment Share on other sites More sharing options...
BoddaH1994 Posted December 20, 2015 Share Posted December 20, 2015 Fuel prices are currently waaaay down. So, air fares? Uh.....no. I'd say that's arguable. I flew to Orlando for IAAPA for like $29. Of course, a flight to a similar city a few days later could have cost me $450. It makes me wonder what the actual cost is to fly a jet 1,000 miles. 2 Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted December 20, 2015 Author Share Posted December 20, 2015 You probably flew Allegiant. Fares are their smallest profit center. Quote Link to comment Share on other sites More sharing options...
bkroz Posted December 20, 2015 Share Posted December 20, 2015 I'm flying Spirit to LAX from CLE in early January for something like $206 roundtrip. Feels good!bkroz, who knows the difference between weather and climate, as it were. 2 Quote Link to comment Share on other sites More sharing options...
KIfan73 Posted December 20, 2015 Share Posted December 20, 2015 Fuel prices are currently waaaay down. So, air fares? Uh.....no. I'd say that's arguable. I flew to Orlando for IAAPA for like $29. Of course, a flight to a similar city a few days later could have cost me $450. It makes me wonder what the actual cost is to fly a jet 1,000 miles. According to this article, it looks like a 747 burns about a gallon of fuel a second...but it does also argue that jet travel is fairly economical..... 4 Quote Link to comment Share on other sites More sharing options...
gad198 Posted December 21, 2015 Share Posted December 21, 2015 Airlines do their best to try and hedge their fuel costs. The idea behind this is to minimize the volatility in what airlines pay for fuel - particularly when oil and gas prices are on the high side. The airlines are trying to essentially "lock in" their fuel costs within a certain range, and they use futures contracts to do this. The use of these futures contracts is the reason why you don't see lower fares when fuel prices are falling. Futures contracts are essentially bets on what the price of an underlying asset will do in the future. In this case the underlying asset is fuel costs. A futures contract is established with an initial price and length of time that the contract is valid. Each contract has a buyer and seller. The buyer of a futures contract wants the price of the asset to go up. The seller wants the price to go down. Airlines are buying oil futures contracts. You may ask: "I thought you said that the buyer of a futures contract wants the price to go up? Why would the airlines want the price of oil to go up?" It's a good question and I'll explain what's happening below. Let's say that oil is selling right now for $40 per barrel and Random Airways wants to protect themselves if oil prices spike up again. They would go and buy a futures contract on oil, let's say, at a settlement price of $40/barrel with a length of two years. Random Airways would pay the seller a premium to buy the contract, as the seller needs to be compensated for the time risk. We'll assume the premium is $10. So far it looks like this for Random Airways: $40/barrel contract settlement price + $10/barrel time premium = $50/barrel initial price What happens if oil prices go up to $100 per barrel? Let's see what happens below: Random Airways established the contract at a total of $50/barrel. Oil prices are now at $100/barrel. Random Airways would pocket the $50 difference from the seller. Result: +$50 What happens if oil prices go down to $20 per barrel? Random Airways established the contract at a total $50/barrel. Oil prices are now at $20/barrel. Random Airways would pay to the seller of the contract the $30 difference. Result: -$30 Remember that airlines need to buy fuel for current operations. As such, they're still paying current market prices for fuel when they fill up their planes. Keeping in mind the information above, let's see what happens when oil prices are at $100/barrel and at $20 barrel: Random Airways is paying $100/barrel to fill up their planes now. Remember that they pocketed $50/barrel on the futures contract because oil prices went up. $100 current price minus the $50 earned on futures contract = $50/barrel net cost of fuel Random Airways is now paying $20/barrel to fill up their planes now. Remember that they had to pay out $30/barrel on the futures contract because prices went down. $20 current price plus $30 paid out on futures contract = $50/barrel net cost of fuel As you can see Random Airways is paying $50/barrel to fill up their planes no matter what oil prices do when they use futures contracts. This is the reason why fares haven't come down even as oil prices have fallen because the airlines fuel costs are locked in for longer periods of time. We probably won't see a significant dip in fares until new futures contracts are drawn up in the coming months. 2 Quote Link to comment Share on other sites More sharing options...
The Interpreter Posted December 21, 2015 Author Share Posted December 21, 2015 That's all very nice. Delta bought....a refinery. And by all accounts they are making out like bandits. 3 Quote Link to comment Share on other sites More sharing options...
flightoffear1996 Posted December 21, 2015 Share Posted December 21, 2015 We just booked our flights a month ago to Jamaica from CVG. It cost us $1500 for two tickets. 1 Quote Link to comment Share on other sites More sharing options...
gad198 Posted December 21, 2015 Share Posted December 21, 2015 It does appear that the Delta is reaping the benefit of their refinery business. This article really does a nice job of laying out why refineries as a whole have done well recently: http://www.businessinsider.com/why-gas-prices-arent-falling-with-oil-prices-2015-8 Delta is still using the futures markets to hedge, albeit to a much smaller degree now. Delta took big losses on their hedging positions for the first 3 quarters of 2015 as the article below points out: http://www.bloomberg.com/news/articles/2015-11-25/airlines-bet-on-long-oil-slump-after-millions-lost-to-hedging The point of all this is that fuel prices coming down doesn't always cause an immediate reduction in airfares. There are a lot of factors that go into pricing, and the airline carriers fuel costs are just one variable in the equation. The airlines that hedged more - even after unwinding most of those hedges and taking the losses - will just take a little more time to pass along savings to their customers. Whether those cost savings are eventually passed along to consumers is another story altogether! 2 Quote Link to comment Share on other sites More sharing options...
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