If fuel costs are under control, then why are airlines stalling?

ishot-2The Bureau of Transportation Statistics has some fresh numbers this morning that suggest airlines are no longer spending a fortune on fuel. Last August, domestic carriers spent an average of $2.02 per gallon on fuel — up from $1.90 a gallon the previous month, but down dramatically from the $3.54 in August 2008.

Given that fuel prices — which, after all, were the excuse for adding more fees — seem to be under control, what’s wrong here?

Why are carriers like Southwest posting losses?

Those are rhetorical questions. Sorta.

We know that fuel is just one of the airlines’ costs, that there are other factors (notably the economy) that are playing into the current industry-wide problems.

Still, it’s worth filing this information away for another day, when the airline industry plays the fuel card again. And then those of us who are more level-headed observers can say: it’s never just about the fuel costs.

What do you think? With energy prices back to affordable levels, do you think the airlines should have something to show for it?

  • SirWired

    One factor behind SW’s losses was fuel hedges that went south. When fuel prices were at their peak, SW cleaned the clocks of the majors because they had locked in the price of fuel, and the competition didn’t. Well, this quarter, SW locked in the price of fuel at a price higher than it happened to cost; hence the loss.

  • John B

    Chris, with all due respect, I think you’re misinterpreting what “affordable” is. The classic hub and spoke airline model is based on fuel going for $20 (maybe $30) per gallon. We’re at over $70 now. Sure, that’s not the $140 we had last year, but it’s still more than 3 times what it “should” be.

  • Carver Farrow

    My $29 ticket each way from SFO to LAX a few weeks ago and next weeks $39 ticket each way counts as a sufficient showing by the airlines for me.

  • Justin

    Let’s face it. If one excuse fails you blame another. Oil is not the only problem. The poor economy and people not traveling also serves as a factor. However, even if everything was ideal there would still be MORE EXCUSES to raise prices. Let’s face it, costs go up even if their costs go down.

  • sami

    @Carver Farrow: I hardly think a ticket between SFO and LAX proves anything. That is like flying from New York to Boston or Minneapolis to Chicago. They are such short flights.

  • http://oussamastake.blogspot.com/ Oussama

    Well airlines kept fuel surcharges unchanged for months after fuel went down in August 2008. Their way of recouping losses and/or making an extra buck. To be fair some airlines stuck to one fuel surcharge amount regardless of the subsequent increase in fuel prices.