Since September last year, jet fuel prices have gone down significantly, nearly cut in half. Moody’s analysts believe airlines around the world will save $70 billion in fuel costs by the end of this year, compared to 2014. The question is, where does that money go? Back to consumers in ticket cost savings, or back to the companies?

Some airlines have not benefited much overall. American Airlines Group Inc. (NASDAQ: AAL) has cut its cost of revenue by 23% and at the current pace looks to beat last year’s earnings by over 70%. Southwest Airlines Co. (NYSE: LUV) revenue costs look to be down 18% by the end of the year, aided by a reduction in fuel costs of around $1.7 billion, extrapolating out to December, which has padded its bottom line by 60%.

Delta Air Lines Inc. (NYSE: DAL) looks to have done the best leveraging low fuel costs, as the company has made more money every quarter this year than it did in all of 2014. Having its own oil refinery does well for Delta on that front. JetBlue Airlines Corp. (NASDAQ: JBLU), on the other hand, was able to decrease its revenue costs by only 13% and looks to have a bottom line around 40% higher this year than last.

Not surprisingly, given the improvements, JetBlue and Southwest have both outperformed the S&P 500 year to date, but there has been no love for American or Delta. American is understandable given a history of bankruptcy and investor caution, but Delta is performing too well this year to be down 3% since January. Judging by the price action relative to financial improvements this year, JetBlue looks overvalued and Delta looks underpriced.

No matter how you slice it, though, the lesson from these past 18 months has been clear: when the price of oil plummets (assuming it’s not due to a financial collapse as in 2008), airline stocks skyrocket.

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As for the not-so-good news, the U.S. Justice Department started an investigation in July into airline collusion. This is a political move more than anything, as trusts are impossible to define by any objective criteria. These investigations usually have more to do with what a politician likes or doesn’t like or thinks he or she can get votes pursuing.

The government probe is looking into American Airlines, United Airlines, Delta Air Lines and Southwest. Management is cooperating and opening communication with the investigators, but all deny any collusion.

By Matt Winkler

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