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Almost everybody has noticed that oil prices have been dropping recently, which consumers are probably very happy about. However, there are consumers who are wondering and expecting airline fares to go down as well. This is not likely to happen. Instead, airline fees have increased by around $4 since mid-October, and this past year is one of their most profitable in a while. Companies are avoiding lowering prices because they are most vulnerable to changes in the economy. There are plans to use their profit towards building more aircraft carriers, improving technology and airport facilities, and new ground equipment. Ultimately, lower airline prices would not be in the best interest of anybody in the economy.
Airlines are taking advantage of this decrease in spending due to oil prices dropping. I find it fair and adequate that the charge is an extra $4 towards a better flying experience in the end. I would hope the airlines use technology to create better entertainment, less time in the air, and not as many delays.
ReplyDeleteIf an extra $4 benefits the economy and the travel experience then I'm for it. I think it's smart that airlines are looking to the future instead of just dropping prices because a factor that goes into flying has decreased. If the demand for airline tickets didn't fall when the price of oil fell then they should keep the price the same as long as it would benefit more than just the airline companies in the future.
ReplyDeleteThe airline companies will surely be making good profit from this drop in oil prices as their material cost will significantly go down. I don't see them changing their fares much in the future as oil prices contribute to slightly less than one-third of the total cost of an average flight. Moreover, I feel airline companies will now work more on enhancing their in-flight entertainments, flight schedules, and other services in order to attract more customers and eventually try to gain a larger market share in the airline industry in the years to come.
ReplyDeleteThe airline industry is cyclical, changing benefiting and losing closely with the economy. It would not be smart to change prices with small changes, as prices are sticky. They even out their profit, taking hits when oil prices are high and benefiting when they are low.
ReplyDeleteThe profit margin for the Airline industry is already so small that it does not make sense for them to drop their prices. They are doing what they can to remain in business.
ReplyDeleteI'm surprised that airlines aren't lowering their prices after oil prices have dropped, but it seems like a good decision. I think the changes that the airlines can make with the extra profit will be more beneficial to all than the small drop in prices would be.
ReplyDeleteIt is a noticeable fact that airline fares remain constant whereas; oil prices go down. However; I do agree with the fact that profits being used for other purposes would result in better and more innovative future acquisitions.
ReplyDeleteAirlines dropping their prices would be negative for the economy. If airlines lowered their price they would have less money for innovation, such as higher safety ratings, which could hurt profits in the future. Also, a lot of consumers prefer one airline over the rest, so even if one airline lowered cost, they would't receive more profit than if they kept prices the same. It is a good idea not to lower prices of airlines.
ReplyDeleteIt seems the $4 increase will outweigh any small decrease in prices over time, especially if it would benefit the economy in a more positive way. As Aaron mentioned, less money for airlines would mean less innovation which could diminish the airline's number one priority; safety. I would rather see the airlines jack up the prices by a small amount rather than lower them to increase consumer confidence.
ReplyDeleteIt makes sense that airlines haven dropped their prices. This is a great opportunity for them to increase revenue and use the extra profits to invest in themselves for the future. But for consumers it is frustrating because oil prices have dropped a lot and the prices of tickets should drop done. In the long run it will equal out if oil prices stay the same, ticket prices should drop in the future.
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