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In the past year, companies have used skyrocketing oil prices to justify all sorts of fees and surcharges. But if you're counting on airlines and other companies to decrease those charges just because oil prices have plummeted recently, think again.
Quick to rise, slow to fall
Anyone who goes to a gas station knows this phenomenon quite well. Gas stations are quick to increase prices at what seems like the first sign of an increase in the futures markets. Yet while gasoline futures are off $0.75 from their highest levels, the average retail price of regular gas remains stubbornly high, at $3.66 per gallon -- about $0.45 lower than its record level of $4.114. That earns a lot of scorn for oil giants like ExxonMobil (NYSE: XOM ) and Chevron (NYSE: CVX ) . Scorn from travelers across the country came down on AMR's (NYSE: AMR ) American Airlines when it led the dash, charging fliers for their first checked bag.
Yet new fee increases keep appearing despite lower oil. Northwest Airlines (NYSE: NWA ) went ahead with plans to add an $80 fuel surcharge for many of its flights. Delta (NYSE: DAL ) will double its charge for a second bag to $50. Meanwhile, it's unclear how long freight companies like FedEx (NYSE: FDX ) and UPS (NYSE: UPS ) will keep higher surcharges in place before competition forces the carriers to cut them.
As unemployment rises and an economic recession looks increasingly likely, these companies are trying to prepare themselves for slackening demand. Yet by alienating their customers, they may actually make their long-term problems worse. And although most fliers and drivers probably won't follow through on threats to give up flying or driving entirely, there's always a chance that the next effort from airlines and energy companies to eke out a few more cents of profit will be the straw that breaks the consumer's back.
Cut your customers some slack, corporate America. Remember, your shareholders count on you to maximize long-term shareholder value. Trying to squeeze every last dime while the getting's good could spell trouble down the road.
For more on the topsy-turvy world of energy prices, read about: