Last updated: 02:12 PM ET, Thu August 20 2015

Airline Fares Fell Dramatically In July

Airlines & Airports | Rich Thomaselli | August 20, 2015

Airline Fares Fell Dramatically In July

Falling jet fuel prices from more than nine months ago are finally starting to be reflected in lower air fares, according to the government’s Consumer Price Index released on Wednesday

While the drop in average airfare of 5.6 percent last month might not sound like a lot, it’s significant – the biggest month-over-month decline in 20 years, according to the Bureau of Labor Statistics.

On a year-over-year basis, the airline fare index has also fallen 5 or more percent in each of the last five months. In fact, the price drop should continue through the end of the month and into late September, as school begins and vacations end.

When fuel prices began falling dramatically late last year and into this early winter, even Congress was perplexed as to why ticket prices didn’t drop accordingly. But aviation experts were quick to point out that airlines hedge their fuel prices well in advance, sometimes up to a year out. Only now is the flying public beginning to see some dividend from that.

Oil recently fell to a cost of $40 a barrel, its lowest in seven years and a huge drop from just over $100 barely 12 months ago.

According to MarketWatch, some analysts also believe that a Congressional probe into airline collusion might have had something to do with the sharp decline. 


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