High oil=low prices?
by Kate Bonamici and Barney Gimbel, FORTUNE Magazine

(FORTUNE Magazine) - Delta (Research) and Northwest (Research) may finally settle the showdown with their pilots' unions this month, but that won't bring an end to industry chaos.

Though oil prices and airfares are still on the rise, don't expect it to last. Why? Because that would make sense--something the airline business rarely does.

"Expect fares to fall," says veteran industry pundit Joe Brancatelli. "It is what has happened every time oil prices have spiked." One reason: Airlines always overestimate what business travelers will pay. So as walk-up fares increase, business travel decreases. To make up the short-fall, airlines start price wars. It might all add up to reasonable summer fares. Top of page

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