Originally Posted by
rickair7777
20-30% of airline costs are fuel. Call it 25% for this example.
If oil doubles, then the airline's variable costs increase by 25%.
Can they raise ticket prices by 25%? Sure, they've been all over the map lately and planes are still full.
That large of a bump would scare away some pax for sure. Also other economic problems related to high oil will scare off some more pax.
But over time, could the pax and industry adapt to $200 oil? Sure. Also $200/bbl today is about $150/bbl in 2008. The talking heads seem to conveniently forget inflation when they screech "Highest Oil Ever!". Oil settled at around $120/bbl today.
Not only that, but we beat our chests over having the "highest margins in the industry."
This is one point where those high margins should work in our favor.
Also, it's a good thing we're a credit card company and not an airline, otherwise we'd be in
real trouble.