Airlines to get US$12 billion global windfall from oil collapse, says report, but will passengers benefit?

Consumers are still missing out because many carriers are still filling seats without having to resort to discounts. -- PHOTO: REUTERS 
Consumers are still missing out because many carriers are still filling seats without having to resort to discounts. -- PHOTO: REUTERS 

NEW YORK - Airlines around the world are set to get a US$12 billion (S$15.6 billion) windfall as the global oil crash cuts bills for jet fuel, the biggest expense in an industry that was battered by surging commodity prices last decade, Bloomberg News said on Wednesday.

The savings will likely translate to fatter profits for airline companies and rewards for shareholders through sweetened dividends or stock buybacks. But consumers are still missing out because many carriers are still filling seats without having to resort to discounts, said the news agency.

Unlike 2008 and 2009, when sagging travel demand damped the boost from fuel plunging 51 per cent from its peak, crude's collapse to a five-year low is providing a tailwind for airlines posting record earnings, said Bloomberg. Profits in 2015 will swell 25 per cent to US$25 billion, according to the International Air Transport Association, the trade group for the world's major airlines.

Bloomberg reported that so far airlines are not trying to capitalise on cheaper fuel by adding more flights to grab more passengers.

So with few empty seats available, they are able to hold the line on fares and pocket the difference from shrinking fuel bills even though prices are coming down for other oil-based products like petrol.