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As Fuel Prices Steadily Decline, Can We Expect Airline Ticket Costs to do the Same?

Cal State Fullerton Professor Researches Airline and Fuel Cost Association
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While gas prices reached unprecedented highs, the cost to travel by air significantly increased too. But as the cost to fill up your tank decreases, Yi Jiang, Cal State Fullerton professor of finance, says airline tickets won’t see the same trend.

Co-author of the 2022 study, “Price asymmetries in the US airline industry,” published in Financial Review, Jiang says there is a correlation between rising fuel prices and raised airfare, but not necessarily a decline in airfares when gas prices drop.

“I find that raising ticket prices, regardless of whether the fuel cost is increasing or decreasing, is associated with significantly higher sales growth and stock returns than reducing prices in the same scenario.”

Jiang says less competition in the industry allows airlines to make these increases without the decreases.

“We find highly concentrated markets (less competitive markets) will exhibit more price asymmetries than in low concentration markets (more competitive markets).”

Read more about Jiang’s research here.