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Fuel prices drop, but not airline fares. Are we surprised?

That dreamy winter getaway should be getting cheaper with falling fuel prices. No such luck, though.

That dreamy winter getaway should be getting cheaper with falling fuel prices. No such luck, though.

Prices at the gas pump haven’t been so low in a long, long time.
You can buy gasoline in Toronto these days for a buck a litre, which is a huge drop from a while back. Not surprising, with oil selling for about $65 a barrel.
Yes, it’s a great time to buy gas. That goes for the airlines, too. But while your local Shell or Esso station has lowered prices, that’s not the case for the major airlines.
Nope, they’re soaking up the sudden windfall and lining their pockets with unexpected cash. And we’re not saving anything on our winter holidays to places like Hawaii or Jamaica.
In some ways, you can’t blame them. After all, when the cost of oil goes up they don’t always, immediately, raise prices for airline tickets. But they do seem to creep up faster than they drop. And, so far, we haven’t seen any noticeable drops.
Canada’s two biggest carriers are “holding the line on pricing,” RBC Capital Markets analysts said in a new research note.
“With lower fuel expense, the opportunity to give some of the benefits back to consumers is present,” the analysts said. “However, we have so far seen no evidence of this.”
“Jet fuel is the single biggest expense for an airline, a cost that can burn up to a third of an airline’s operating budget,” Global TV reported this week. “Any change in price can have a substantial impact on a carrier’s finances.”
“Air Canada aims to be price competitive in all markets but beyond that we cannot speculate about future changes to fares or fees,” Air Canada spokesman Peter Fitzpatrick told Global.
WestJet said there’s been a lag between the fall in oil prices and declines in its fuel costs. “It takes time to realize any savings,” spokesperson Robert Palmer said.
The TV network also noted there’s “not much reason” to lower fares. After all, Canadians are flying regularly and paying the price. There’s not exactly any outcry in the marketplace, notwithstanding bloggers like me.
Air Canada noted that they have to buy fuel in US dollars. That’s tough given that the Canadian dollar is hovering around 87 or 88 cents vs. the US greenback.
Still, the RBC analysis noted that the net impact of lower prices for jet fuel “has been significantly positive for Canadian airlines.”
TOPDECK TRAVEL
I hadn’t heard much about them, but the latest brochure from Topdeck Travel sure makes them look like players in the youth travel field.
London is one of many exciting European cities you can visit on a trip with Topdeck Travel.
They sent me a cool brochure for Europe and Sailing in 2015, which includes everything from four-day Iceland adventures to mega, 49-day tours of the continent where you can visit such spots as London, Prague, Sarajevo, Venice, Athens, Barcelona, Istanbul and Amsterdam. Nice.
Topdeck is geared to travel for folks between 18 and 39 and has been in business since 1973. In addition to “regular” tours, they also have cool-sounding sailing and camping trips you can take.
It’s a cheeky brochure, complete with bits such as this bit about Berlin: “Strap on your dancing shoes and assemble the wolfpack, tonight we party.” In one of their descriptions of Amsterdam they say that it’s “on to canals, bicycles and the notorious Red Light District. You know what to do.”
It’s clever, and smart, and it certainly differentiates them from most travel offerings. They also have come up with something called The New European Bucket List, a rundown of the most unique experiences and popular destinations for young travellers in 2015.
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