With the price of oil hitting the skids, investors have renewed their interest in airline stocks.  Since fuel accounts for up to a third of total airline operating costs, it stands to reason that airline shares should rise as oil prices fall.

And rise they have: in the past month United Continental (NYSE:UAL) shares have jumped 22%, Delta (NYSE:DAL) is up 19%, American Airlines parent AMR Corp. (NYSE:AMR) and US Airways (NYSE:LCC) have both risen 16%, and Southwest (NYSE:LUV) is trading up 6%.

Other good news for airlines: bookings are up in May and travel demand is expected to rise significantly this summer.  Still, in an industry with such enormous fixed costs that balances on razor-thin margins, there are clouds lurking behind even the most lustrous silver linings.  Here are three factors to keep in mind for the flight ahead:

1. Jet Fuel Prices Are Still High. Yes, it’s great news for airlines that oil prices are dropping.  But jet fuel prices don’t move in perfect rhythm with oil prices. In fact, jet fuel increases have far outpaced oil price hikes so far this year. This week’s Gulf Coast jet fuel price is $2.98 a gallon – down significantly from $3.20 a gallon in March.  Lower, yes, but jet fuel prices are still at their highest level since 2008.  The Air Transport Association says if jet fuel averages $3 a gallon throughout the year, airlines will face a fuel bill $15 billion higher than the one they paid last year.
2. Fuel Price Volatility Is A Bigger Challenge. High fuel prices bad, but wild price swings are worse because it makes it extremely difficult for airlines to plan routes and manage operations.  Here’s why: When fuel prices are low, airlines add larger aircraft and more routes to accommodate more passengers.  When fuel prices are high, they use smaller, more fuel-efficient aircraft and cut back on less profitable routes.  But when fuel prices fluctuate dramatically, making those adjustments fast is like trying to stop a speeding 747 on a dime.
3. Mergers Add Operational Complexity. The economies of scale gained by airline consolidation are well known.  But the process of integrating separate systems, fleets and employees can be challenging and the little things that inevitably fall through the cracks can be costly. Case in point: as United worked to consolidate its systems with merger partner Continental this week, the airline’s future schedule included flight numbers 93 and 175 – the same United flights that were hijacked by terrorists and crashed on Sept. 11, 2001. None of the merged carriers’ employees noticed the error until it was called to their attention. Although United eliminated the flight numbers after 9/11 Continental offered flights with those numbers and an automated system “inadvertently” reinstated the flights into the combined schedule.  The glitch has resulted in a PR nightmare for United and prompted howls of protest from the airline pilots union, which said the error demonstrates “a severe disconnect from right and wrong”.  Lesson learned: There are no small details when it comes to airline mergers – a fact that Southwest will do well to remember as it ties up its merger with AirTran (NYSE:AAI).