Since I started reporting on the daily airfare index, I’ve had a number of questions about the cost of fuel and to what extent fuel prices influence fare increases and decreases. Every network-wide airfare increase is accompanied with an explanation and the latest favorite has been the increasing cost of jet fuel.
Certainly fuel prices influence pricing, but based on the changes in 2006 we can say that competitive behavior outweighs cost factors. Southwest Airlines enjoyed an additional cost benefit in 2006 based on long-standing fuel hedges that made its fuel costs lower than competitors. The latest rounds of increases by Southwest are in great part a result of the fact that these hedge contracts have expired and now Southwest’s fuel prices are closer to the rest of the industry.
Here is a helpful site supported by the Department of Energy that lists the daily spot jet fuel prices. The site also provides historical pricing going back to 1990
