The price of oil has fallen off a cliff. No really. Doesn’t this look like a cliff to you?
Oil is now trading near a four-year low, say our friends over at the WSJ. And the momentum is “hard to stop.”
What does this mean for us?
Here are a few thoughts …
No more fuel surcharges. Any remaining fuel surcharges, either for airlines or cruise lines, must be eliminated soon. Travelers also expect these companies to hedge their fuel responsibly, so that future price increases will be factored into the cost of a ticket. In other words, the public won’t tolerate any sudden and retroactive fuel surcharges in the future, because we’ve already had our warning.
Here come the drivers! The Transportation Department has been complaining about a shortfall in road tax revenue. Wait until next summer, when a lot of pent-up demand to hit the road sees hundreds of thousands of vehicles unleashed on American highways. With gas this cheap, the only thing that could keep us off the road would be a depression. And that’s increasingly unlikely.
A pushback on other fees. Airlines (and some hotels) were easily able to introduce new fees that had nothing to do with higher fuel costs, but were blamed on soaring energy prices. (For example, the $15 first-checked-bag-fee, which was actually part of a long-planned airline “unbundling” strategy, not an effort to recoup higher fuel prices.) As energy costs circle the drain, and airline profits rise, I would expect to see some significant resistance to these ill-advised surcharges.
How about you? What do you think lower fuel costs will mean to travelers?
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You’re right about oil prices dowhill. see my view in http://www.thehistoryoftheday.blogspot.com. feel free to comments.
Greed is independent of the price of oil, or of anything else. If the executives of airlines, cruise lines, and hotels think they can get away with gouging customers with whatever fees they can dream up, that’s exactly what they’ll do. And they’ll keep doing it until resentment gets to the point where it becomes visible in the bottom line. Then they’ll retrench– temporarily, until the next opportunity.
After the holidays, the BIG FARE SALE will happen. Airlines will try to keep their heads above water and see who will LOSE THE LEAST AMOUNT OF MONEY NEXT YEAR.
Sure, oil’s down, so what!
Watch capacity, it will be wayyyyy down, very soon. Again, Mostly NO ONE MADE A PROFIT THIS YEAR in this industry, yet you all whine about surcharges that kept alot of airlines from going under or going into bankruptcy. The article said, airline profits rise?…..yeah, really? what quarter? Sure, wish I had the crystal ball in this slumping economy.
I sincerely hope that the airlines will work to hedge their fuel prices during this drop in price.
Light, sweet crude for January delivery was down $1.43 at $42.24 a barrel TODAY.
At what price did SOUTHWEST hedge their fuel?
I agree with the first two, but the third one is off-mark. USAirways already declared the checked-baggage fee a success this week, meaning most likely that the fee is here to stay. It may not have been to recoup fuel surcharge, but there hasn’t been a huge public outlash for it.
At the beginning, a lot of people were disgruntled, but it’s now become accepted that we will have to pay for baggage. It makes sense considering just how much luggage handlers had to put on each plane, and how much of an impact this change has had on that. It’s pretty much the airlines saying, “since you don’t know how to pack lightly, we’ll help you.”