Senator Calls For Investigation Into Why Airfares Increase While Costs Sink

Oil prices are down, airlines are profitable, but ticket prices aren’t going down and some carriers are still adding fuel surcharges. Thus, New York Senator Chuck Schumer has called for a federal investigation into why we’re all paying so dang much for air travel.

Schumer has asked both Department of Justice and the Department of Transportation to investigate why airfares continue to increase at a time when the costs of operating an airline are down and when the airlines are making record amounts of money from add-on charges.

Fuel costs account for nearly half of an airline’s costs, and even though the price of oil has sunk significantly since June, consumers are not seeing any trickle-down in the form of lower airfares, claims Schumer.

While one could argue that there is a lag effect between the drop in oil prices and any change in airfares, the Senator points out that airlines have historically used increases in oil prices to explain immediate hikes in ticket prices.

“The industry often raises prices in a flash when oil prices spike, yet they appear not to be adjusting for the historic decline in the cost of fuel,” he explains. “ticket prices should not shoot up like a rocket and come down like a feather.”

Schumer is also asking regulators to look into the impact that the recent mergers — United/Continental, US Airways/American, Delta/Northwest, Southwest/AirTran, just to name a few — that have significantly reduced competition in the industry while also making the surviving companies more efficient and profitable.

“At a time when the cost of fuel is plummeting and profits are rising, it is curious and confounding that ticket prices are sky-high and defying economic gravity,” said Schumer. “With so little competition, will the consumer never get a break?”