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Gas Is Cheap. Will Plane Tickets Follow?

12/27/2014

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PictureCourtesy American Airlines
Unfortunately, the short answer is likely "no." The low oil prices - which translate to cheap gas - will not lower the price of an airline ticket. Right now - the national average for a gallon of regular is hovering around $2.32. Here in the DFW area most stations are below $2.00 (which is awesome!). 

So, if you drive around in one of those gas-guzzlers (like me), you could save a crap-load!  The other day I filled up and it cost me just under $40.  $20 cheaper than what I'm used to paying.

As I'm writing this, a barrel of oil cost just under $56 on the New York Mercantile Exchange. That doesn't only mean potentially big savings for you, but also airlines. However, don't expect to see a much, if any, drop in ticket price.  

Why won't airlines lower prices on tickets?

In short an airline is a business - and believe it or not - a business does not exist to create jobs. A business exists for one reason: to make money. Make no mistake about it - a business is in the business to make as much money as it can. The successful ones fill a perceived need (air travel, for example), and convince you to part with your money to take advantage of their product. A side effect of a successful business is that said product, and jobs...among other things. If businesses operate long enough without a profit - they'll go out of business. Call it greedy, call it smart, call it whatever you want. This is how the world works.

Back to the airline industry. If they are consistently over 80% capacity on domestic flights (with that number likely to rise), why would they lower their prices if they can lock in more profits. I mean, even when it seems airlines are nickel and diming us out of the nose - guess what? We're still buying up tickets! Business is good. If I were a CEO I wouldn't lower ticket prices. I don't need to. 

Airlines aren't the only businesses to do such things. When was the last time Starbucks lowered the price of a cup of coffee because the price of coffee beans fell? 

Maybe I'm wrong

Hell, in this case, I'd love to be wrong. Unfortunately, I'm guessing that even if airlines do lower prices, it won't be by much. On the bright side there are always some good deals out there. Southwest, for example, has recently had some nicely-priced non-stop flights from Dallas to Chicago. 

How do you save, then?

  • Shop around. These days, it doesn't pay that much to be loyal to one airline. That's because in order to get the perks to make being "loyal" worth it - it'll cost you thousands. Look at different airlines before you buy and you'll probably end up saving a little cash. 
  • Use miles/points. You can easily save a lot of cash by using points you earn from different credit cards. There are a ton of ways to get the necessary points too.  I won't get into them here, because I've written about several already in a previous blog.
Hopefully this helps you plan your future travels. Now get out there and enjoy!
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