Why can/do airlines still charge fuel service charges (and bag fees) even though oil has fallen by 2/3rds?

Even if they buy their gas six months in advance, I don't think they will drop the fees, its more money to them, plus, gas prices may not stay this low for a long time.Why can/do airlines still charge fuel service charges (and bag fees) even though oil has fallen by 2/3rds?
A. Most airlines are losing huge amounts of money. Therefore, they are not going to drop prices and lose even more money unless forced to by falling passenger demand. They have to try and make money if they plan to stay in business.





B. Airlines don't always buy their fuel six months in advance. Some airlines (Southwest, for example) buy fuel hedges and lock in prices years in advance. Some don't hedge fuel at all. Earlier this year, when the price of oil was soaring, some airlines bought fuel hedges out of fear that prices would go higher still. Instead, the price of oil plummeted. But, they are still paying the higher prices because of the mistimed hedges. If you buy hedging contracts at $90 a barrel and the market prices drops to $50, you're out $40 a barrel.Why can/do airlines still charge fuel service charges (and bag fees) even though oil has fallen by 2/3rds?
Once an airline discovers that passengers are willing to pay a given price for a ticket, it has no incentive to lower the price, no matter how much fuel prices drop. The only way for prices to come down is if different airlines lower prices to compete with each other. Unless and until that happens, prices will remain high.





The basic principle is ';whatever the market will bear.';
because airline companies buy all there fuel six months in advance so if the fuel prices drop they'll still charge you in accordance to what they paid for it