Advertisement
Business

Lower fuel prices are starting to push airfares down

American Airlines

A ground crew worker fuels an American Airlines plane parked at a Miami International Airport terminal. Lower fuel costs are pushing down airfares, according to a new study. 

(Mark Elias / Bloomberg)

Good news for airlines passengers: Carriers are finally passing on some of the savings from dramatically lower fuel prices toward fare reduction.

And the low fares may continue until the end of the year.

The average domestic airfare for September was 18% lower than during the same time last year, and 9% lower than in August, according to a study by the travel site Hopper.com based on tickets sold in those months.

For the next three months, average fares prices are projected to be 17% cheaper than in the same period in 2014, the study projects.

Advertisement

The most likely reason for the price drop is that fuel prices have sunk 47% since last year, enabling airlines to cut fares and still make a comfortable profit margin, according to the study.

“Historically, oil prices have contributed relatively little changes in airfare, but over the past year its influence has grown,” the study said.

Some critics have demanded that airlines drop fares by the same rate that fuel costs had declined.

But Vaughn Jennings, a spokesman for the trade group Airlines for America, said the savings on lower fuel costs are going toward other areas of the industry that have been neglected over the last few years.

Advertisement

“Airlines continue to invest in new products and planes, pay down debt, reward employees and investors,” he said.

To read more about travel, tourism and the airline industry, follow me on Twitter at @hugomartin.


Advertisement