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Here's why you're paying more for your plane ticket and getting less

Nicole Goodkind
·Nicole Goodkind

Profits for U.S. airlines are soaring. Oil prices are low and more people are flying more miles. United (UAL), American (AAL) and JetBlue (JBLU) reported record Q3 earnings with the top four U.S. airlines selling 83% of their seats for the quarter. So should we expect to benefit from these high-flying times the airlines are enjoying? Nope.

Plane ticket prices have increased by 2.7% since September of last year. During the same period, oil prices fell 15% -- so why the disconnect? There are two reasons, and the first is the fuel surcharge added to tickets.

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These prices actually have little correspondence with the actual cost or even amount of fuel you’re using—different classes pay different prices and the fee goes up and down arbitrarily based on how many connecting flights a passenger might have. Fuel surcharges don’t move with oil price, and considering that they’re a normal cost of business for an airline it doesn’t make sense to separate them. The only reason airlines do this is to sock it to people who pay with miles—they don’t have to pay the ticket price, but they have to pay taxes and surcharges. When fuel surcharges can account for nearly half the total fare that’s a big punch in the gut to frequent flyers.

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The other reason is that instead of passing their earnings on to customers, airlines are on the largest jet-buying spree in the history of aviation. Credit is cheap and demand is high so instead of lowering prices or, you know, adding legroom, they’re buying 10,000 new planes from Airbus and Boeing.

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So you’ve spent a month’s rent to be cramped in between a wailing newborn and a man whose odor is questionable to say the least, and you’ve just lost feeling in your left leg… But the airlines? They’re laughing all the way to the bank.

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