Despite dropping fuel prices, airfares continue rise. Something doesn't see right. Airlines appear to have no incentive to lower fares. Call it lack of competition perhaps.
From USA Today online:
U.S. airlines are saving tens of millions of dollars every week
because of lower prices for jet fuel, their largest expense. So why
don't they share some of the savings with passengers?
Airlines have no compelling reason to offer any breaks. Planes are full.
Investors want a payout. And new planes are on order.
fares are going higher. And those bag fees that airlines instituted in
2008 when fuel prices spiked aren't going away either.
In the 12
months ended in September, U.S. airlines saved $1.6 billion on jet fuel.
That helped them post a 5.7% profit margin in the first three quarters
of this year, robust for the industry but lagging behind the 10% average
for the Standard & Poor's 500.
the past six years, airlines have done a great job of adjusting the
number of flights to fall just short of demand. As a result, those who
want to fly will pay a premium to do so. Airlines are selling a record
85.1% of their domestic seats. Thanks to several mega-mergers, four big
airlines control the vast majority of flights, leaving very little room
for another airline to undercut fares.
Read more by clicking on this link.