How American Airlines’ use of Econ 101 will tick you off
The Story
American Airlines (now merged with US Airways) posted record profits last quarter, thanks to super low gas prices. It’s good for them — but sorry, not for you, our dear traveler.
Plunging fuel prices, record profits won’t translate into lower airfares for #Charlotte flyers on American/US Airways http://t.co/0x9ey6AWXe
— Ely Portillo (@ESPortillo) January 27, 2015
The Facts
– American raked in a $597 million profit in the fourth quarter, way up from its $1.9 billion loss a year ago.
– It largely credits the super cheap fuel costs we’re all enjoying at the pump these days.
– But when CEO Doug Parker was asked if this meant lower fares in the future, his answer came right out of an econ textbook: As long as demand at the current prices is high, the prices won’t lower.
– “Pricing is tied to demand, and demand remains strong. When demand is strong, you see pricing move accordingly.” – Parker
American Airlines will save $5 Billion on Fuel this year but will operate as if oil were still $100 a barrel http://t.co/JLtAVcdJj3 $AAL — Mike Mahoney (@Mahoney) January 27, 2015
– Parker adds that not all the money is going to the bottom line. It’s also going to:
- Retire old planes and buy new, energy-efficient planes
- Add fancy seats to first class
- Pay shareholders
- Give employees raises
Yes, you can whine
https://twitter.com/biztrends/status/560175695230275584
Trying to figure out why is it more expensive to fly to Raleigh and Charlotte than flying to Dallas
— Brian Parker (@The_Fat_Mamba) January 26, 2015
So. Charlotte is one of the most expensive airports to fly out of, in the entire country. WTF.
— Asia Chloë Brown (@AsiaChloeBrown) October 5, 2014
I wasted time, wasted gas and parking money just to hear they won’t cover my laptop.I’ll never fly with American Airlines again.
— Jaja Vankova (@JajaVankova) May 13, 2013
C5’s Take
At least we’re going to get lie-flat seats in first class. Not that we can afford first class.
Photos: Tony Gutierrez / AP & John Simmons / Charlotte Observer
This story was originally published January 28, 2015 at 1:00 AM with the headline "How American Airlines’ use of Econ 101 will tick you off."