Airline profits have skyrocketed thanks to plummeting fuel prices — and a Sen. Charles Schumer wants the federal government to investigate why fliers are still paying sky-high prices for their tickets this holiday season.
Fuel prices were above $100 a barrel in 2010 and have plunged to about $60 a barrel now. But airline tickets have gone in the opposite direction — up more than 10 percent over the past five years after inflation adjustments, according to the New York Democrat.
"Why are prices going up? This is just really unfair and wrong," said Schumer. "It's safe to say that the airlines can afford to pass at least some of those savings on to the consumer."
Airlines will make a profit of almost $20 billion this year and are expected to make $25 billion in 2015, according to the International Air Transport Associations. The industry is expected to make a net profit of $7.08 per passenger in 2015 — up from $6.02 in 2014 and as low as $3.38 in 2013.
The trade group claims the industry is still fragile despite profit margins, because of political unrest and global conflicts. And, the industry organization says, the cost of round-trip tickets is expected to drop about 5 percent next year.
But that's not soon enough for Schumer, who said "ticket prices should not shoot up like a rocket and come down like a feather."
When oil prices had climbed to over $100 a barrel, airlines began adding a fuel surcharge to tickets. And, despite the dramatic drop in fuel costs, that surcharge hasn't gone anywhere.
"It's a lose-lose for consumers and it's just not fair," Schumer added.
The price of fuel accounts for more than a third of airlines' operating costs.
Schumer is asking the Department of Justice and Department of Transportation to investigate whether airplane mergers have contributed to the steep prices by lowering competition — and he wants to see why low fuel prices are not helping consumers.
"I'm urging the feds to step in and do a price investigation on behalf of consumers who must buy holiday travel tickets that can break the bank," he said.
Even though oil is tanking, OPEC has so far decided not to cut back on production in order to boost prices for its oil. The cartel's head, Abdalla Salem el-Badri, told Bloomberg News on Sunday that it won't make such a move even if prices drop as low as $40 a barrel. He said he believes the market will stabilize.
Additional reporting by Harry Shuldman
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