Some companies said they are using the windfall in fuel costs to reduce debt and to make needed reinvestment in their infrastructure.
Plummeting oil prices have led to falling plane ticket prices-- and prospects for an even bigger bonanza of consumer-friendly fares in the coming months, airline industry experts say. With fuel prices down by two-thirds from the dizzying heights of mid-2014, when oil topped $100 per barrel, the once cash-strapped airline industry is now reaping record profits.
Increased competition also have helped coax down once stubbornly high fares, the experts say. "We've seen typical domestic prices drop about 14% over the past year," Patrick Surry, chief data scientist at Hopper, the airfare prediction app, told AFP.
"The drop in fuel prices is a major factor, along with increasing competition from low cost carriers, both domestically and internationally," Surry said. Experts say fuel makes up about a third of an airline's costs. With oil and jet fuel costs down two-thirds since last year, airlines can expect to reduce their overhead by about 20%.
Some of the best bargains are for air fares to popular US travel destinations like Chicago, New York, Los Angeles, and San Francisco, cities where competition is stiff. Good deals can also be had on routes to the southwestern US energy meccas of Houston and Dallas, where the slowdown in the oil business has led to discounted air fares.
Some companies said they are using the windfall in fuel costs to reduce debt and to make needed reinvestment in their infrastructure.
"We are utilizing our cash to continue to secure our future," said Gerry Laderman, senior vice president at United Airlines. In 2015, we prepaid $1.2 billion of debt, including $300 million in the fourth quarter." Likewise, Richard Anderson, CEO at Delta, said of his company: "Our focus on our long-term goals is unwavering. We will continue to reinvest in the business at an appropriate level to sustain long-term growth."
The US Bureau of Labor Statistics in a report earlier this month (January) said air fares by foreign travelers on US airlines fell 15.0% in 2015, the largest calendar-year drop since the index was first published in 1987.
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