OnDemand WTP Pricing Research

Airlines are benefiting from continued strong travel demand that allows them to push fares higher | Supply & Demand Chain Executive

United cut its fuel bill by $135 million compared with last year, and Southwest saved $64 million — about 4 percent in each case.

And that is just the beginning. Those savings are based on what fuel cost in 2013 and don’t include the big decline in prices since June. Southwest paid $2.94 per gallon in the third quarter but predicts it will spend between $2.70 and $2.75 per gallon in the fourth quarter.

Airlines for America, a trade group for the biggest carriers, estimates that every penny decline in fuel prices saves the industry $190 million. That suggests the carriers could save more than $10 billion if fuel stays at current prices.

Airlines could share that windfall with passengers in the form of cheaper tickets, but that doesn’t look likely, at least not yet. The big airlines just pushed through a modest fare increase — $4 for U.S. round-trip tickets.

Southwest’s average one-way fare was $160.74, an increase of just $1.35 over the same time last year but up nearly $50 in the last five years, a period in which mergers reduced the number of competitors and fuel prices climbed. American didn’t give fare figures but said that the amount passengers paid to fly each mile, a figure called yield in the airline business, set a record.

Read complete article here:

Airlines are benefiting from continued strong travel demand that allows them to push fares higher.

1 Comment on "Airlines are benefiting from continued strong travel demand that allows them to push fares higher | Supply & Demand Chain Executive"

Trackback | Comments RSS Feed

Post a Comment

WP-SpamFree by Pole Position Marketing