The dire predictions for the airlines is based on the price of oil staying above $40 a barrel. If Saudi Arabia does increase its production to the levels that it is promising, that should cause oil prices to start declining, although not until Q3
If other OPEC countries increase production, or if China's economy starts to overheat, leading towards inflation and a economic slowdown, that should also cause prices to fall.
But, if gas is still over $2 a gallon come Christmas, then it's a whole other story.
But I have two questions. First, why don't the LCCs raise fair? I understand that some have hedged, but they still have to be affected to some degree by oil prices. If the legacy carriers want to add $5 to $10 per segement, I would be inclined to add $2.50 to $5 per segment. After all, that's only the cost of 2 gallons of 87 octane.
Second, how are the European carriers coping? I assume that jet fuel in Europe is more expensive than in the U.S., because of European taxes. But have European carriers seen the price of jet fuel run up to the degree they have here, and are the former state carriers having the same pricing problems that U.S. legacy carriers have?