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Passengers Unlikely To Benefit From Decline In Airline Fuel Costs

Alaska Airlines announced record profits for the fourth quarter and for calendar year 2014.
Tom Banse
Northwest News Network
Alaska Airlines announced record profits for the fourth quarter and for calendar year 2014.

The steep drop in oil prices is helping to pad the bottom line of Seattle-based Alaska Airlines. But don't expect lower fares on the horizon.

Fuel is an airline's biggest single expense, so the plunging price of jet fuel is providing a nice "tailwind," as Alaska Airlines Chairman Brad Tilden put it Thursday. This region's dominant air carrier boasted ofrecord profits for the fourth quarter and for calendar year 2014.

Will lower fuel expenses lead to lower airfares? The answer is "no," according to Alaska Air's senior vice president Andrew Harrison.

"When pricing tickets we look at the supply and demand in each of our markets, and adjust prices to balance the two,” he said.

Harrison told Wall Street analysts during an earnings conference call that travel demand is strong and airplanes are flying nearly full. So there's little incentive to cut fares.

The benefits from lower fuel prices are instead landing in the pockets of investors and airline workers. Alaska Air Group's employees participate in a profit sharing plan.

In conjunction with its quarterly earnings release, the company announced that most of its 13,000 employees will receive bonuses next week equivalent to nearly a month's worth of pay.

Alaska Air Group is the parent company of Alaska Airlines and Horizon Air. The airline company also announced that it would boost its stock dividend by 60 percent, to 20 cents per share.

Copyright 2015 Northwest News Network

Correspondent Tom Banse is an Olympia-based reporter with more than three decades of experience covering Washington and Oregon state government, public policy, business and breaking news stories. Most of his career was spent with public radio's Northwest News Network, but now in semi-retirement his work is appearing on other outlets.
Tom Banse
Tom Banse covers national news, business, science, public policy, Olympic sports and human interest stories from across the Northwest. He reports from well known and out–of–the–way places in the region where important, amusing, touching, or outrageous events are unfolding. Tom's stories can be found online and heard on-air during "Morning Edition" and "All Things Considered" on NPR stations in Washington, Oregon, and Idaho.