What a dilemma -- to buy or not to buy a holiday airline ticket.
It shouldn't be so hard: After all, oil is down, so ticket prices are lower, right? Oh, wait, ticket prices are not lower.
But they could be. The thing is, it's been a crazy year. Anything can happen, and it's not over yet.
Look at what we've seen so far: Passengers have endured a torrid pace of airfare hike attempts in the first half of the year -- 21 in all. But then you have to contrast these hikes with the free-falling price of oil over the past three months -- from just under $150 per barrel to $80 per barrel.
Meanwhile, those pesky fuel surcharges imposed by U.S. domestic airlines haven't budged from their highs for travel within the U.S., and international fuel surcharges are just this week starting to slowly retreat:
$170 roundtrip surcharges for many domestic U.S. tickets
$336 roundtrip average fuel surcharge for trans-Atlantic tickets
$391 roundtrip average fuel surcharge for trans-Pacific tickets
And, just in case you hadn't noticed, the airlines now find that they've traded an oil crisis for a financial crisis. The difference? People flew during the oil crisis while more and more are sitting out this latest disaster.
In the meantime, fuel surcharges have turned into a bit of a PR disaster for the airlines as lower energy prices have not corresponded to lower ticket prices.
Now, interestingly, several international airlines are beating the PR pants off their U.S. counterparts simply by lowering their fuel surcharges.
Why are U.S. airlines only following suit on competitive international markets at this point?
Well, to hear American Airlines CEO Gerard J. Arpey tell it, we're supposed to be looking at the fabled "big picture" -- a picture that includes the not-so-distant days when the price of oil was killing the carriers.
"Even when airlines were posting profits, they lagged behind other companies in return on investment," Arpey said.
OK, so it's "make that hay while the sun shines" time -- yes, we get it.
On the other hand, much of this hay-making strategy seems to be all about cutting capacity: Our estimates at FareCompare.com show more than 200,000 fewer seats daily by the end of the year and 70 million fewer seats for all of next year. Is it working?
So far, so good: Flight cutbacks have kept pace with the withering demand. Take, for example, the typically slow air travel month of September: JetBlue had an eye-popping 28 percent increase in revenue per seat-mile. Fewer seats (11.5 percent) kept pace with fewer passengers (4.8 percent), which, in turn, kept flights packed and that gave JetBlue the pricing power required to keep airline tickets high.
But what about a backlash?
Face it, with this financial crisis, we've been seeing more and more travelers on the sidelines: About 10 percent more stayed home last month compared to September a year ago. And this week, an analyst with Credit Suisse noted that corporate bookings were down 10 percent to 20 percent and were expected to stay that way.
So, this could signal another potential disaster for the airlines, particularly the legacy carriers: losing a significant chunk of the ultra-lucrative business traveler sector, a sector that pays up to five times more for a ticket than leisure travelers do.