Cheap oil has been a boon to many air travelers who have been paying less for tickets of late. But according to a report in the Wall Street Journal, this trend of cheaper fares has the industry worried.
“Investors are increasingly concerned low fuel prices are driving some carriers to drop the capacity discipline and pricing power that helped the industry generate a record profit of almost $19 billion last year,” the Journal reports.
Fares have fallen particularly in markets like Dallas and Chicago, where low-cost competition to the major carriers has built out capacity. This dynamic has caused investors to fear that airlines will be unable to maintain their revenue per passenger, a closely watched metric in the industry.
But airlines will have to be careful how they go about trying to raise fares. The Justice Department announced last summer that it is investigating the industry for possibly colluding to keep capacity low, according to the Journal.
