Airlines Prices Up Despite Costs Dropping

Any airlines biggest expenditure is fuel. With the price of jet fuel down a whopping 18 percent since the summer, many are scratching their heads at the 3 percent airfare increase seen in many of the major airlines across the country. The increase puts the average cost of a domestic flight at $396, which is 2.5 percent higher than the 2013 holiday season.

Even with the questionable hike in flight costs, planes are more packed than ever. A record high 85 percent of seats have been booked so far this year. “If people keep coming and filling the airplanes at this price point, why would they lower the prices,” CEO of BestFares.com Tom Parsons said.

Supply and demand is a clear factor in current fare rates. In the last 10 years, there have been several airline mergers, general unrest in the industry and there are simply fewer airlines and seats on flights for the two million Americans who fly.

In the simplest terms, airlines have no compelling reason to offer lowered airfare rates. Plans will continue to be full, investors want their returns and new planes are on order.

Airlines representatives insist the record profits made from rising airfare go towards improving the customer experience seen in upgraded airport terminals, WiFi systems and new planes. Hard to believe when you’re sitting in seats that seem to be getting smaller on planes that seem even more cramped than ever.

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