Oil Prices Have Fallen. So Why Haven’t Airfares?

Summary

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WSJ What’s News (July 7, 2026)

Episode Theme: "Oil Prices Have Fallen. So Why Haven’t Airfares?"

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Episode Overview

This episode delves into why airfares remain stubbornly high despite a significant drop in oil and jet fuel prices. It also covers other major business and global headlines, including U.S. political developments, international conflicts affecting oil, AI industry price wars, and a dramatic building safety scare in Manhattan.

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Key Discussion Points & Insights

1. U.S. Political Update: Senate Race & White House News

• Maine Senate Race Crisis
  • A key Democratic candidate, Graham Platner, faces allegations of sexual assault (00:50).
  • Democrats withdraw support, intensifying intra-party ideological tensions on choosing a replacement.
  • Maine is pivotal for Democrats' bid to retake the Senate majority.

“Potential candidates include people who fell short in the governor's primary race earlier this year, like Maine Secretary of State Shena Bellows... the party centrist wing says that Shah is better equipped for the general election.” – Alex Osola (01:40)

• White House Project:
  • President Trump oversees construction of a $5M granite helipad funded by Lockheed Martin—linked to concerns over powerful Marine One helicopters (02:10).
• U.S.-Iran Relations:
  • The Trump administration revokes Iran's license to sell oil after Revolutionary Guard missile attacks near Hormuz, jeopardizing peace talks (02:45).
• Turkey & F35 Jet Sales:
  • President Trump signals intent to remove U.S. sanctions on Turkey and potentially resume F35 jet sales, contradicting earlier Congressional bans (03:10).

“We're going to be taking the sanctions off. It's time to do that. Okay? We don't want to sanction friends.” – Donald Trump (03:29)

2. AI Industry: Old-School Discounts in a High-Tech Race (04:25)

• Major Players:
  • OpenAI and Anthropic are aggressively offering large discounts and subsidies—some exceeding $3 million—to attract startups.
• Competition Dynamics:
  • Highly similar products cause developers to switch tools swiftly, fueling a "price war" with big losses for both companies.
• Profitability Questions:
  • Continuous discounts strain financials and threaten IPO prospects due to margin erosion.

“It's kind of funny because it's such an advanced technology, but they're using very basic sales tactics to try and get customers.” – Berber Jin (04:44)

• Customer Upside:
  • Startups benefit from cut-rate access to powerful AI tools, likened to the period of instant delivery app discounts (05:39).

3. Markets Update & Building Collapse Scare (07:15)

• Markets:
  • Despite a positive update from Samsung, tech stocks decline worldwide; U.S. crude futures surge above $72 following Iran news.
• Pfizer Headquarters Incident:
  • The 37-story former Pfizer building in Midtown Manhattan faces possible collapse due to buckling beams amid conversion to apartments.
  • NY Fire Department evacuates the site and nearby buildings; no injuries reported (08:01).

“The box beams, the steel beams have started to bend and deflect from the weight...the building has continued to move since we've been on the scene.” – John Esposito (08:01)

• Regulatory Reaction:
  • NYC’s Department of Buildings files a safety complaint citing unapproved foundation work.

4. Main Story: Why Airfares Remain High Despite Falling Oil Prices (08:47 onward)

Jet Fuel & Fares:

• Background:

  • Jet fuel prices had doubled due to the Iran war; airlines raised fares to cope.
  • Now, jet fuel is down 40% from its April peak, but airfares remain elevated.

• Core Explanation:

  • Airlines possess new pricing power and are reluctant to lower fares.
    • Continued robust demand: people are traveling for vacations and willing to pay more.
    • Reduced seat supply: Airlines cut routes, with less competition from the likes of Spirit Airlines (the former "discount price setter").

“Airlines have realized that they have some pricing power right now and they're not wanting to give it up easily...and Spirit Airlines...is gone. So that's sort of one big check on fares that has been eliminated.” – Allison Seider (09:08)

Looking Ahead: Profits and Demand

• Profit Forecasts:
  • Earnings reports will reflect higher fuel costs only partially offset by higher fares.
  • Airlines covered about 40–50% of the fuel cost jump with higher fares in Q2 (09:53).

“Fuel prices were high for a lot of the second quarter, and even though fares were up, they weren't fully covering the higher fuel costs...” – Allison Seider (09:53)

• Future Fare Levels:
  • Traditionally, price wars would force fares down, but airlines hope to hold ground due to less competition (10:48).
  • Not great for consumers; good for airlines’ bottom line.

“Airlines are optimistic that this time is different. And that's good news for them and their bottom lines and maybe not such good news for their customers.” – Allison Seider (10:48)

5. Notable New Product: Fiat’s $14,000 Topolino (11:23)

• Fiat launches the Topolino, a two-seat electric vehicle, in the U.S. for $14,000:
  • Extremely compact (8ft long, 1,000 pounds), no doors or A/C, top speed 25 mph—intended for golf cart buyers, resorts, and beach towns, not highways.

“You can also get a version without doors if that's your vibe. But that low price comes at a cost. Speeds top out at 25 miles an hour. That means no driving on highways and there's no AC.” – Alex Osola (11:35)

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Notable Quotes & Moments (with Timestamps)

• On Democratic Party Infighting:

  “…the party centrist wing says that Shah is better equipped for the general election.” (01:40)

• Trump on Turkey Sanctions:

  “We don't want to sanction friends. It's very simple.” – Donald Trump (03:29)

• AI Industry Price War:

  “It's kind of funny because it's such an advanced technology, but they're using very basic sales tactics...” – Berber Jin (04:44)

• Pfizer Building Emergency:

  “The box beams, the steel beams have started to bend and deflect from the weight...” – John Esposito (08:01)

• On Why Fares Stay High:

  “People are still traveling and they've shown a willingness to pay these higher fares. There's less capacity, less supply in the market.” – Allison Seider (09:08)

• Airline Optimism on Holding Fares:

  “Airlines are optimistic that this time is different. And that's...maybe not such good news for their customers.” – Allison Seider (10:48)

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Timestamps to Key Segments

• Senate Race & White House Updates: 00:50 – 03:39
• AI Industry Price Wars: 04:25 – 06:30
• Markets Update & Pfizer Scare: 07:15 – 09:08
• Main Story—Airfares: 09:08 – 11:11
• Fiat Topolino Launch: 11:23 – 12:36

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Episode Tone & Language

The discussion is brisk, journalistic, and informative with a focus on direct explanations and clear analogies. Quotes from expert guests (like Allison Seider and Berber Jin) maintain a conversational style, mixing business analysis with plain-English explanations and relatable comparisons.

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This summary provides a comprehensive guide to the episode’s key stories and gives context for listeners who missed the show, distilling complex business and news developments into clear, digestible points.

Transcript

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[Alex Osola]

companies are competing for clients the old fashioned way with discounts and oil prices have fallen. So why are airfares still flying high?

[Allison Seider]

Well, airlines have realized that they have some pricing power right now and they're not wanting to give it up easily.

[Alex Osola]

Plus, the Trump administration revokes a key financial benefit for Iran. It's Tuesday, July 7th. Alex I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today, Starting today with a big US Political story. Bernie Sanders is the latest progressive to call for Graham Platner to drop out of the main Senate race. Democrats are rescinding their endorsements and cutting off funding a day after a woman alleged that Platner sexually assaulted her, but Platner has denied the allegation. Maine is key for Democrats hopes of taking back the majority in the Senate. If Platner drops out, Democrats would have until July 27th to pick someone else. Potential candidates include people who fell short in the governor's primary race earlier this year, like Maine Secretary of State Shena Bellows, the state's former Senate president, Troy Jackson, and its former state health director, Nirav Shah. The discussions around a replacement are exposing the ideological rifts in the Democratic Party. Some progressives want a candidate with similar policy positions to Platner's, someone like Jackson. The party centrist wing says that Shah is better equipped for the general election. At the White House, President Trump's latest construction project is underway, a new granite helipad on the South Lawn. Pentagon contractor Lockheed Martin is putting about $5 million towards the project. Lockheed's Sikorsky unit makes the Marine One helicopters that fly presidents around. There have been concerns that new models of the helicopter were too powerful to safely land on the lawn surface. A Lockheed spokeswoman said that the company donated the funds to the National Park Service and that the donation is part of a history of supporting projects in Washington and across the country. Today, the Trump administration revoked a license allowing Iran to sell oil on the open market, the main economic benefit for Tehran in the interim peace deal. It's a reprimand coming hours after the Islamic Revolutionary Guard Corps fired missiles and drones at ships near the Strait of Hormuz and is a clear sign that Washington isn't happy with how the peace talks are going. Separately, President Trump landed in Ankara, Turkey today for a summit of NATO leaders. Speaking alongside Turkish President Recep Tayyip Erdogan, Trump said that he would consider selling the F35 jet fighter to Turkey. That sets up a potential clash with Congress, which in 2020 passed a law barring the US from selling F35s to Turkey as long as Turkey relies on Russian air defense technology. Erdogan in 2017 approved Turkey's import of a Russian air defense system. The decision triggered American sanctions on Turkey. Today, Trump said he wanted to undo that.

[Donald Trump]

We're going to be taking the sanctions off. It's time to do that. Okay? We don't want to sanction friends. It's very simple.

[Alex Osola]

And in France, far right leader Marine Le Pen says she plans to run in next year's presidential elections. She made the announcement after a court reduced her sentence, clearing her path to run again. She had been convicted for misusing European Parliament funds. Now she's expected to enter the race as a frontrunner. Top artificial intelligence companies like OpenAI and Anthropic aren't just in a race to have the best models. They're desperate for enterprise customers that will provide lasting revenue. To get them in the door, these high tech companies are using an old school tactic, the reliable old discount. I'm joined now by Berber Jin, who covers startups for the Journal Berber. What companies are offering these discounts and what kinds of discounts are they exactly?

[Berber Jin]

These discounts are mainly being offered by OpenAI and Anthropic and they are essentially competing against one another to get customers to purchase mostly their coding tools, which have really taken off across Silicon Valley. And what we're kind of seeing is sort of a price war that maybe looks similar to like a mattress sale or some of the one time discounts that you'll see during holiday sales. It's kind of funny because it's such an advanced technology, but they're using very basic sales tactics to try and get customers, mainly startups, hooked onto their technology.

[Alex Osola]

I mean, it's gotta be costing these AI companies a ton to offer these discounts. What are they trying to get out of it exactly?

[Berber Jin]

Software developers are very fickle. Customers like they'll switch from using Claude code to codex, which is OpenAI's tool, in an instant as soon as they feel like it's better suited for the task they want to complete. The product is just so similar between the two, they have to resort to a price war to win over business.

[Alex Osola]

So what do these discounts mean for the customers of OpenAI and Anthropic?

[Berber Jin]

This is great for the customers and I almost think about a few years ago when instant delivery was really big and everyday consumers would be getting huge discounts to use, like Uber Eats versus DoorDash. It's a similar dynamic here where a lot of these customers are young startups and they're getting subsidies to use these AI tools that sometimes go above $3 million. Both of those companies are raising extremely large piles of cash. So it's hard to see this price war how it comes to an end. Both of these companies are trying to IPO and this is hurting their margins, it's hurting their path to profitability. So it will be really interesting to see also how investors feel about businesses that are losing so much cash.

[Alex Osola]

That was WSJ reporter Berber Jin. Thanks Berber.

[Berber Jin]

Thanks, Alex.

[Alex Osola]

Coming up, Pfizer's former headquarters in midtown Manhattan is at risk of collapse. That's after the break.

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[Alex Osola]

In markets today. Samsung gave what was by all accounts a rosy update, but investors expected more. And that's weighed on tech stocks around the world. The Nasdaq closed down 1.2% and the Dow and S and P also dropped. And oil prices jumped in late trading. The Treasury Department's revoking its oil sales waiver for Iran. We just told you about that. And it signals a new test for the peace talks benchmark U.S. crude futures climbed by as much as 5% to their highest level this month, going above $72 a barrel. In midtown Manhattan, the former Pfizer headquarters was at risk of collapse today. Its columns buckled and floors sagged. The 37 story building is being converted into 1600 luxury apartments and while construction crews had to evacuate, no injuries were reported.

[John Esposito]

It's a very serious situation. The box beams, the steel beams have started to bend and deflect from the weight. We evacuated the building and started evacuations of surrounding buildings, and the building has continued to move since we've been on the scene.

[Alex Osola]

That was New York's Fire department chief, John Esposito. The Department of Buildings filed a construction safety complaint against the developers today. It cited a lack of approvals for foundation work. One of the companies redeveloping the building, Metroloft, says it's working with city officials to understand the scope of the situation. In the weeks after the start of the Iran war, jet fuel prices doubled and carriers raised their fares just to keep up. Now the cost of jet fuel has finally started to come down. It's fallen 40% from its peak in April. But ticket prices, those aren't falling. Allison Seider, who covers air travel for the Journal, joins me now to talk about why. Alison, Fuel costs appear to be the reason for these fare hikes. So why aren't we seeing the fares fall now that fuel is cheaper?

[Allison Seider]

Well, airlines have realized that they have some pricing power right now and they're not wanting to give it up easily. People are still traveling and they've shown a willingness to pay these higher fares. There's less capacity, less supply in the market. Airlines have cut back on routes and flying. And Spirit Airlines, which once was sort of the discount price setter that kind of forced other airlines to match its bargain fares, is gone. So that's sort of one big check on fares that has been eliminated.

[Alex Osola]

So airlines are going to be reporting their second quarter earnings over the next few weeks. Delta is the first one up on Friday. Between the higher fuel costs, which are going to be weighing on the bottom line, and, and higher fares, where are analysts expecting airlines profits to land?

[Allison Seider]

Fuel prices were high for a lot of the second quarter, and even though fares were up, they weren't fully covering the higher fuel costs with higher fares. You know, they were capturing 40, 50% of those higher fuel costs, even though revenue seems to have been pretty strong. You know, fuel will take a chunk out of airline earnings. But what everyone wants to know about is, you know, how strong is demand going forward? What are the bookings like for the next couple of quarters? Like, you know, we're in summer right now. That is a time where people take a lot of trips. So I think there's questions about is the demand we're seeing just that people really committed to that summer vacation and they don't want to give it up or what will happen after Labor Day.

[Alex Osola]

So funny you should mention I just booked a flight for October to Atlanta and it actually cost me about the same amount as it did when I booked another flight there back in March. So like about $300 per passenger, which Google tells me is pretty high. Should I expect to be paying these higher fares just forever?

[Allison Seider]

Historically, airlines never been able to hold onto these higher fares. You know, always someone kind of comes in trying to undercut their competition, and it ends up sort of a race to the bottom. But the airlines are optimistic that this time is different. And that's good news for them and their bottom lines and maybe not such good news for their customers.

[Alex Osola]

That was WSJ reporter Allison Seider. Thanks, Allison.

[Allison Seider]

Thanks for having me.

[Alex Osola]

And finally, Italian automaker Fiat today started selling a two seat electric vehicle in the U.S. it costs just $14,000. The car is called the Topolino. That means little mouse in Italian. And also fun fact is the name of Mickey Mouse in Italian. And the car is little. It's even, I'd say, cute. It weighs around 1,000 pounds and is 8ft long. You can also get a version without doors if that's your vibe. But that low price comes at a cost. Speeds top out at 25 miles an hour. That means no driving on highways and there's no ac. So who is this for? Fiat has a target customer in mind, people who buy golf carts. The company says it sees a market for the little vehicles not on the links, but in places like resorts and beach towns where people can take them for a spin around, around the neighborhood. And that's what's news for this Tuesday afternoon. Today's show was produced by Danny Lewis and Anthony Banci with supervising producer Tali Arbel. I'm Alex Osoleff for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

[Telus Demos and Miriam Gottfried]

Hey, this is Telus Demos and I'm Miriam Gottfried.

[Alex Osola]

We're reporters at the Wall Street Journal and The hosts of WSJ's Take It's a weekly show that gives listeners a

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[Alex Osola]

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