US Lawmaker Calls on Airlines to Cut Prices Should Fuel Prices Dip

Major airlines have begun raising costs, such as checked-bag fees, in the wake of rising fuel costs due to the conflict in the Middle East, but now a U.S. lawmaker is urging the companies to lower prices when fuel prices come down. 

Rising Fuel Costs and Airline Pricing 

“If airline pricing is truly tied to global fuel costs, then it must be truly responsive when those costs decline,” said U.S. Rep Ritchie Torres in a letter to the CEOs of Delta Air Lines, United Airlines, JetBlue Airways, and Southwest Airlines, according to CNBC. “I call on you to publicly commit to lowering costs associated with air travel should jet fuel prices decline. The American people deserve fairness and pricing models that do not only reflect market conditions, but also economic justice.”

After labor, fuel is the largest expense for airlines. 

CNBC also reported that jet fuel averaged $4.88 per gallon in places such as New York, Houston, Chicago, and Los Angeles as of April 2. This was about a 95% increase. 

None of the airlines provided a comment to CNBC. 

Capacity Cuts, Pricing Strategy, and Demand

Delta previously mentioned that its fuel bill this quarter was about $2 billion, and as a result, they'd be "meaningfully" scaling back capacity plans. With this, lower capacity could lead to fare price increases. However, if fuel prices drop and more capacity opens up, fares would be cheaper. 

Delta CEO Ed Bastian recently provided a comment about what would happen if fuel prices decline and said that “fuel recapture is going to be important. No matter what we do, and the degree in which we can retain any of the pricing strength that we talked about from industry rationalization, that will certainly help us boost our margins this year and clearly into next year as well.”

In addition to higher baggage fees, airlines around the world have higher airfares and other surcharges. 

Despite these increases, it appears demand hasn't dipped.