When fuel costs go up so do shipping rates at UPS, FedEx, Railroads, Buses and even Airlines with ticket price increases and surcharges too. For us to adequately discuss this issue we must also understand the Flow of Fuel.
We must also come to terms with the priority of fuel and its costs in the flows of our civilization as it is one of the most important flows, next too common currency, communication, food distribution, water, law and education. But without fuel flows and stability, we will cause issues with all the others too that is to say they are all interconnected you see?
Without fuel buses cannot run for schools for instance, see the problem. There are solutions to all this, but it changes the over all dynamics, so when studying linear questions of this nature, we cannot assume an either or answer. Without people traveling on airlines, less business is conducted and the flow of trade and communication can be hurt as well you see?
When fuel costs are passed on and the price goes too high people choose not to partake in travel and seek to find alternate solutions to being there or alternate vacations or methods of transportation. In the case of the airlines although flying is very efficient and about the only choice in long-distance or across large bodies of water due to time, some consumers, businesses and travelers might opt out; forgoing vacations and business deals. There are of course other viable future alternatives, but they have not been built as of yet in the present period.
As fuel costs mount many industries in the transportation sector like small trucking companies and airlines, which have sold pre-sale tickets may not be able to pass on the costs in real time. Thus rapid changes in fuel costs cannot be transferred to customers. Although in airlines it is more important to have each seat filled and thus at 80% filled aircraft they are not diving into a spiral, but many are not able to set any quarterly result speed records either you see. Consider all this in 2006.