Fuel costs lower for airlines, but is it reaching consumers?
The CBS Evening News is launching a series of reports that explore the effect of lower energy prices. Our first installment covers the impact on air fares. Other reports to follow will focus on domestic oil exploration, jobs, and the auto industry.
Ian Bearce loves his job at a visual effects production company in Manhattan. You'd have to for the 1,204 mile commute.
From office door to the door of his home it takes six hours.
Home is in Minnesota, where he spends the weekends. He's documented his "super commute" on video. CBS News joined him on his last trip home.
Bearce says the only thing that's gotten smaller in the air is his legroom
In the third quarter, jet fuel prices dropped six percent and profits grew. The top three performers: Southwest, up 27 percent; American, a record 87 percent; and United 144% over last year. And those profits may look small when you consider fourth quarter jet fuel prices have plummeted nearly 25 percent.
Ian's wife Megan books all of his travel. They've paid $13,000 in plane tickets this year, that's up $2000.
But if the airlines are saving money on fuel costs, wouldn't the couple expect those savings to be passed on to them?
"You would hope so, but I don't think...I would be very suprised to see that happen," said Megan. "We're locked in. He needs to be at work Monday and ideally be back Friday."
"It's frustrating," said Ian. "It would be terrific if we saw a reduction in those ticket prices."
Analyst Darryl Genovesi doesn't forsee a drop in airfares until 2016. "So their incentive for the near term... is to try to maximize fares, not to try to cut them.
He says business and last minute travelers will keep paying for higher fares. We were a perfect example. Ian Bearce booked a month in advance. His ticket: $296. Our last minute fare was $688.
If demand remains high, would airlines have no incentive to lower fares?
"That's correct. The airlines are very focused on keeping the fuel savings," said Genovesi.
An industry trade group projects U.S. carriers will make $13 billion in profits next year, and forecast a 5 percent drop in airfares. Another pointed out Monday that fuel is just one cost for airlines, and that their operating costs rose three percent this year.
