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Gas Is Down, But Most Airfares Stay High

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Gas Is Down, But Most Airfares Stay High


Gas Is Down, But Most Airfares Stay High

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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This is Morning Edition from NPR News. I'm Renee Montagne.


And I'm Ari Shapiro. Steve Inskeep is on assignment. Gas prices are the lowest they've been in almost two years. According to the U.S. Department of Energy, gas prices have fallen more than $1.50 a gallon since the middle of September. Jet fuel and diesel have seen similar dramatic declines. But the fuel surcharges at airlines and taxis have stuck around. NPR's Tamara Keith has more.

TAMARA KEITH: The U.S. airline industry estimates its expenses jump by $430 million every time the price of a barrel of crude oil increases by a dollar. So this summer, when fuel prices were through the roof, a surcharge seemed like a reasonable thing. But then fuel prices dropped, and airlines were still using the surcharges. Rick Seaney, CEO of, described it as a PR headache.

Mr. RICK SEANEY (CEO, Fuel surcharges had little to do with the price of fuel or the length of a trip, but it had everything to do with higher ticket prices.

KEITH: Just in the last week or so, Seaney says airlines have eliminated surcharges on thousands of domestic flights. But it isn't any cheaper to fly. Those extra charges are now just part of the base ticket price.

Mr. SEANEY: While it was good news that there was a little more transparency, the bad news is it really didn't help people on the consumer side from a ticket price standpoint.

KEITH: And he says there are still hefty surcharges on international flights. The average is $300 to Europe and $360 to Asia.

Mr. DAVID CASTELVETER (Vice President, Air Transport Association): It's a human reaction to say, OK, the price has come down. I want to see my price come down. But there's a lot that happens in between.

KEITH: David Castelveter is vice president of the Air Transport Association, an airline industry trade group.

Mr. CASTELVETER: The price of fuel has been high for a long time. Because it only recently dropped, you can't just draw a line across and say, geez, we're where we were when we started, because we're not. We have a lot of catching up to do.

KEITH: He says the industry will lose between three and five billion dollars this year, proof that it never raised prices enough to cover the increased cost of fuel. Even the surcharges weren't enough to bring airlines back to profitability. And airlines certainly aren't the only ones hanging onto higher prices. I took a cab to the interview with Castelveter. The fare was 5.25, with an extra dollar for gas. A sticker in the window said, "The surcharge will expire at the end of January." UPS and all shipping companies had fuel surcharges for years, and those charges jumped over the summer. I recently sent a birthday present to my sister-in-law via UPS Ground. The fuel surcharge was nine and a quarter percent.

Unidentified Man: This is your tracking number.

KEITH: Can you show me where the fuel surcharge is?

Unidentified Man: Right here.

KEITH: Ninety-seven cents?

Unidentified Man: Ninety-seven cents.

KEITH: Karen Cole is a spokesperson for UPS.

Ms. KAREN COLE (Spokeswoman, UPS): We are in a little bit of a lag, but it is important to note that our fuel surcharge is not built into our rate. So as fuel prices do go down, those prices also go down as well.

KEITH: The lag comes because the surcharge rate is updated just once a month. And the data it relies on is two months behind. So in November, the surcharge dropped by one percentage point. But the rate adjustment actually reflects the price of fuel back in August. When it comes to fuel surcharges, it seems it could be a while before consumers experience the same relief they felt at the pumps. Tamara Keith, NPR News, Washington.

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