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Wednesday, October 29, 2008
Someone Isn't Thinking!

Basic principles of supply and demand dictates that as the price of an elastic product or service decreases in value the demand would increase. So with fuel prices dropping why do we still see fuel surcharges which are absolutely ridiculous? According to USA Today, the cheapest ticket from LA to Bangkok, Thailand had an added surcharge of $525 a week ago. This is $352 more than it used to be one year ago. The price of oil, by the way, is the same now as it was last year - check out the chart.


Half a month out before a major holiday season and it would seem like a good move for airlines to cut some of those extra charges down and drive revenue for a final push to make up for some lost ground. Chances are they are thinking, "perhaps we keep the surcharges at the current levels and buy up lots of jet fuel now so we can stabilize our costs in the future?" It is a good move assuming people are going to be willing to travel at the same level that they are now.
Written at 10:00 AM by Sebastien.
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