NEW YORK( TheStreet) -- Falling fuel prices are a huge boon for the airline industry, which is headed for one of its most profitable years ever. But don't expect fliers to get a share of the benefits.
Scarred by the traditional ups and downs of the industry, airlines are avoiding not only cutting airfares but also increasing capacity, which can stimulate even more profits given the reduced cost of flying.
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No carrier has even hinted at cutting fares. In fact, most raised round-trip domestic fares by about $4 in mid-October. Wall Street, meanwhile, has been outspoken in its opposition to adding capacity.
"Fiscal responsibility and customer investment are the themes that are driving the industry now," John Heimlich, economist for Airlines for America, the industry's trade group, told reporters Thursday in response to a question about airfares.
"The first priority is to make sure you have strong financial health," Heimlich added. "We are much more vulnerable to recessions and cyclicality than other industries are. We don't hear people clamoring for lower prices of cheeseburgers when beef prices come down or for lower prices of iPhones when semiconductor prices go down."
Instead of cutting fares, Heimlich indicated, airlines are investing in new aircraft, with an estimated 317 deliveries in 2014; new ground equipment; improved airport facilities; as well as Wi-Fi and new technology, including improved computers. Capital expenditures for the top nine airlines totaled $12.4 billion in 2013 and $10.2 billion in the first three quarters of 2014.
"It's not in the employees' or customers' interest not to put that money back to work for the customer," Heimlich said.
In October, during American Airlines' (AAL) third-quarter earnings conference call, President Scott Kirby was asked about the likelihood of a fare price cut as a result of falling oil prices. The answer: not very likely.
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