Average Third-Quarter Domestic Air Fares Reach Highest Quarterly Level; Top 100 Airports: Highest Fare in Cincinnati, Lowest Fare at Dallas Love

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Contact BTS 5-09 Dave Smallen 202-366-5568

Wednesday, January 28, 2009 - Average domestic air fares in the third quarter of 2008 reached $362, the highest level of average fares for any quarter in the 13 years measured by available data (Table 1), the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) reported today.

BTS, a part of the Research and Innovative Technology Administration, reported that the average domestic itinerary fare in the third quarter was 2.8 percent higher than the $352 average domestic fare in the second quarter of 2008, the previous quarterly high (Table 2). See http://www.bts.gov/xml/atpi/src/avgfareseries.xml for historic data.

Average domestic air fares in the third quarter of 2008 were up 10.4 percent from the third quarter of 2007 (Table 1) in the largest year-to-year increase since the second quarter of 2006, and average fares increased 7.4 percent above the previous July-to-September high set in 2000 (Table 6). The third-quarter 2008 average fare was up 22.0 percent from the post-9/11 third-quarter low of $297 in 2004 (Table 6).

Average fares increased 25.8 percent from the third quarter of 1995 to the third quarter of 2008 compared to a cumulative 42.8 percent inflation rate.  Third quarter 2008 fares increased 10.4 percent from the third quarter of 2007 compared to a 4.9 percent inflation rate (Table 1).

Average fares are based on domestic itinerary fares, round-trip or one-way for which no return is purchased. Fares include taxes and fees. Averages do not include frequent-flyer or “zero fares” or a few abnormally high reported fares. Average fares in this release may not be comparable to BTS fare press releases before the second quarter of 2007 which did not exclude frequent flyer fares or abnormally high fares.  Bulk fares continue to be excluded as in earlier releases.

Spirit Airlines failed to file its report for the third quarter.  Data from Spirit for the second quarter of 2008 was not included in this release or the October 2008. Atlantic City, NJ, is not included because Spirit operates more than 90 percent of the flights there.  The Atlantic City average fares in the July 23, 2008 press release were based on incorrect data. The data available on the BTS database for the fourth quarter of 2007 and the first quarter of 2008 have been revised to eliminate Spirit’s submissions. See http://www.bts.gov/xml/atpi/src/index.xml  Spirit has been notified about the incorrect data. The failure to file was referred to the Department’s Office of General Counsel for review.

Beginning with the first quarter 2008 release, BTS does not include Alaska, Hawaii and Puerto Rico airports in average fare totals and rankings. Average fares for those airports are available on the BTS Air Fare web page:  http://www.bts.gov/xml/atpi/src/index.xml  

Of the top 100 airports based on originating passengers, the highest third-quarter average fares were in Cincinnati; followed by Knoxville, TN; Greenville/Spartanburg, SC; Grand Rapids, MI; and Madison, WI.  The lowest fares in the top 100 airports were at Dallas Love; followed by Orlando, FL; Burbank, CA; Long Beach, CA; and Islip, NY (Table 3). See the BTS Air Fare web page for average fares for the top 100 airports.

The largest year-to-year average fare increases for the third quarter among the 100 largest airports, ranked by 2007 originating passengers, was 26.8 percent in Minneapolis/St. Paul; followed by Islip, NY; Chicago Midway; Knoxville, TN;  and Columbus, OH (Table 4). 

The biggest year-to-year average decrease was 4.8 percent in Long Beach, CA; followed by Burlington, VT; Salt Lake City, UT; Atlanta; and San Antonio, TX (Table 4).

The largest average fare increase from the third quarter of 1995 was 212.0 percent at Dallas Love, followed by Lubbock, TX; Colorado Springs, CO; El Paso, TX; and Houston Hobby (Table 5).

The largest average fare decrease from the third quarter of 1995 to the third quarter of 2007 was 39.0 percent in White Plains, NY.  The other top five average fare decreases over this period took place at Manchester, NH; Akron/Canton, OH; Providence, RI; and Newburgh, NY (Table 5).

The Air Travel Price Index (ATPI)

A separate measure of fares, the BTS Air Travel Price Index (ATPI) reached an all-time high in the third quarter, up 3.4 percent from the previous high set in the second quarter of 2008 (Table 2).  See http://www.bts.gov/xml/atpi/src/datadisp.xml?t=1 for historic data.

The ATPI was up 9.9 percent from the third quarter of 2007 to the third quarter of 2008 (Table 8). 

The ATPI is up 19.8 percent from its pre-9/11 third quarter high set in 2000 and up 27.2 percent from its post-9/11 third quarter low set in 2004 (Table 7).

ATPI is a statistical index that documents quarterly changes in airline prices since the first quarter of 1995.  The index measures changes in airline ticket prices used on identical routings and identical classes of service on a quarter-by-quarter basis.  The index can be used to compare airfares in the most recent available quarter to any quarter since the first quarter of 1995, which is the base quarter (1Q 1995=100).

While the ATPI measures changes in fares, average fares measure the actual amount paid by passengers, including taxes and fees.  Average fares take account of both the level of fares and the number of passengers purchasing fares at different levels.  Average fares do not necessarily account for the level of service, as ATPI does. 

Average fare calculations and the ATPI, while similar, measure air fares in two different ways and may produce different results.  ATPI measures the rise in airfares and average fares show the increased use of lower fares. The varying results reflect trends in the airline industry that have resulted in more passengers using lower air fares even though fare levels continue to rise.  Three of these trends follow.

First, low-cost carriers, which generally offer lower fares, now carry about 40 percent of all domestic enplaned passengers, up from about 14 percent in 1995.  Second, the network carriers have been forced to match some of the low-cost carrier relaxed fare rules, such as eliminating the “Saturday Night Stay Rule”, which has allowed more passengers to purchase lower fares.  Third, use of the internet allows almost instant price comparisons that give the customer the opportunity for unprecedented low-fare shopping. 

Excluding Alaska, Hawaii, and Puerto Rico, the largest year-to-year fare index increase for the third quarter among the 85 largest airline markets, ranked by passengers, was 26.8 percent in Islip, NY; followed by Manchester, NH; Minneapolis/St. Paul, MN; Chicago; and Baltimore (Table 9). 

There were no year-to-year ATPI decreases. The smallest year-to-year increases for the third quarter were for trips originating in Spokane, WA; Greensboro/High Point, NC; Atlanta; Salt Lake City, UT; and San Antonio, TX (Table 9).

The largest fare index increase from the third quarter of 1995 to the third quarter of 2008 was 110.7 percent in Long Beach, CA.  The other top ATPI increases over this period took place at Burbank, CA; Cincinnati; Las Vegas; and Ft. Myers, FL (Table 10).

There were no third-quarter fare index decreases for the 13-year 1995-to-2008 period.  The smallest increase was 3.8 percent in Denver.  The other smallest increases were in Richmond, VA; Milwaukee; Manchester, NH; and Detroit (Table 10).

Alaska, Hawaii and Puerto Rico airports have been excluded from Tables 9 and 10 of this release.  Those airports are included in the total ATPI and data about them can be found on the ATPI rankings on the BTS Air Fare web page.

Additional information about average fares, including fares for the top 100 airports based on U.S. originating domestic passengers, can be found on the BTS website at http://www.bts.gov/xml/atpi/src/index.xml.  Additional information can also be found on that page about the ATPI, including indexes for foreign-origin itineraries and the top 85 air travel markets based on originating passengers.  Fourth-quarter 2008 average fare data and the ATPI will be released on April 29.           

The ATPI series are computed using a price index methodology.  Although the ATPI is computed using a tested index methodology, it is considered a research series at this time.

Table 1: Third Quarter Average Fares 1995-2008 Compared to Inflation Rate

Fares based on domestic itinerary fares, round-trip or a one-way for which no return is purchased.
Averages do not include frequent flyer fares.

Excel | CSV

Source: Bureau of Transportation Statistics

Note: Percent change based on unrounded numbers

* Rate calculated using Bureau of Labor Statistics Consumer Price Index

Table 2: Average Domestic Airline Fares and Air Travel Price Index Since Fourth Quarter 2006

(Percent Change by Quarter)
Fares based on domestic itinerary fares, round-trip or one-way for which no return is purchased.
ATPI 1Q 1995=100

Excel | CSV

Source: Bureau of Transportation Statistics

* Average fare numbers for the fourth quarter of 2007 and the first quarter of 2008 were revised from the first-quarter 2008 press release issued on July 23, 2008

Note: Quarter-to-quarter changes may be affected by seasonal factors.

Note: Percent change based on unrounded numbers

Table 3: Highest and Lowest Average Domestic Fares Third Quarter 2008

Top 100 Airports* Based on 2007 U.S. Originating Domestic Passengers
Fares based on domestic itinerary fares, round-trip or one-way for which no return is purchased.
Averages do not include frequent flyer fares.

Excel | CSV

Source: Bureau of Transportation Statistics

* Not including Alaska, Hawaii or Puerto Rico

Table 4: Top Five Average Domestic Fare Increases and Decreases, 2007-2008

Top 100 Airports* Based on 2007 U.S. Originating Domestic Passengers
Fares based on domestic itinerary fares, round-trip or one-way for which no return is purchased.
Averages do not include frequent flyer fares.

Excel | CSV

Source: Bureau of Transportation Statistics

Note: Percent change based on unrounded numbers

* Not including Alaska, Hawaii or Puerto Rico

Table 5: Top Five Average Domestic Fare Increases and Decreases, 1995-2008

Top 100 Airports* Based on 2007 U.S. Originating Domestic Passengers
Fares based on domestic itinerary fares, round-trip or one-way for which no return is purchased.
Averages do not include frequent flyer fares.

Excel | CSV

Source: Bureau of Transportation Statistics

Note: Percent change based on unrounded numbers

* Not including Alaska, Hawaii or Puerto Rico

Table 6: Percent Changes to 2008 in Domestic Average Itinerary Fares and the Inflation Rate* by Year Since 1995

(Third Quarter to Third Quarter for fares; Sept to Sept for inflation)
Fares based on domestic itinerary fares, round-trip or one-way for which no return is purchased.
Averages do not include frequent flyer fares.

Excel | CSV

Source: Bureau of Transportation Statistics

Note: Percent change based on unrounded numbers

* Rate calculated using Bureau of Labor Statistics Consumer Price Index

Table 7: Percent Changes to 2008 in the Air Travel Price Index From Third Quarter Each Year Since 1995

U.S.-Origin Itineraries, Third Quarter to Third Quarter

Excel | CSV

Source: Bureau of Transportation Statistics

Table 8: Year-to-Year Changes in the Air Travel Price Index (ATPI) Since 1995

U.S.-Origin Itineraries Third Quarter to Third Quarter (First Quarter 1995 = 100)

Excel | CSV

Source: Bureau of Transportation Statistics

Table 9: Top Five Third Quarter Air Travel Price Index Increases and Decreases, 2007-2008

Top 85 Air Travel Markets*
Air Travel Price Index Percent Change, Third Quarter 2007 to Third Quarter 2008
(First Quarter 1995 = 100)

Excel | CSV

Source: Bureau of Transportation Statistics

* See Top 85 Market Rankings Table 16 for Alaska, Hawaii and Puerto Rico airports

Table 10: Top Five Air Travel Price Index Increases and Decreases (Smallest Increases), 1995-2008

Top 85 Air Travel Markets
Air Travel Price Index Percent Change, Third Quarter 1995 to Third Quarter 2008
(First Quarter 1995 = 100)

Excel | CSV

Source: Bureau of Transportation Statistics

* See Top 85 Market Rankings Table 15 for Alaska, Hawaii and Puerto Rico airports

For air fares for the following airports, go to http://www.bts.gov/xml/atpi/src/index.xml.

Multiple airport areas for which a single average fare calculation is available are: Boston, Chicago, Dallas-Fort Worth, Houston, Los Angeles, New York, San Francisco and Washington, DC.

Airports covered by average fare calculations are:

Alabama: Birmingham
Arizona: Phoenix, Tucson
Arkansas: Little Rock
California: Burbank, Fresno, Long Beach, Los Angeles Intl, Oakland, Ontario/San Bernardino, Sacramento, San Diego, San Francisco, San Jose, Santa Ana (Orange County)
Colorado: Colorado Springs, Denver
Connecticut : Hartford
District of Columbia: Dulles, Reagan National
Florida: Ft. Lauderdale, Ft. Myers, Jacksonville, Miami, Orlando, Pensacola, Sarasota/Bradenton, Tampa, West Palm Beach
Georgia : Atlanta, Savannah
Idaho: Boise
Illinois: Chicago Midway, Chicago O'Hare
Indiana: Indianapolis
Iowa: Des Moines
Kansas: Wichita
Kentucky: Louisville
Louisiana: New Orleans
Maine: Portland
Maryland: Baltimore
Massachusetts: Boston
Michigan: Detroit, Grand Rapids, Flint
Minnesota: Minneapolis/St. Paul
Mississippi: Jackson/Vicksburg
Missouri: Kansas City, St. Louis
Nebraska: Omaha
Nevada: Las Vegas, Reno
New Hampshire: Manchester
New Jersey: Newark
New Mexico: Albuquerque
New York: Albany, Buffalo, Islip, New York JFK, New York LaGuardia, Newburgh, Rochester, Syracuse, White Plains
North Carolina: Charlotte, Greensboro, Raleigh/Durham
Ohio: Akron/Canton, Cincinnati, Cleveland, Columbus, Dayton
Oklahoma: Oklahoma City, Tulsa
Oregon: Portland
Pennsylvania: Harrisburg, Philadelphia, Pittsburgh
Rhode Island: Providence
South Carolina: Charleston, Greenville/Spartanburg
Tennessee: Knoxville, Memphis, Nashville
Texas: Austin, Dallas Love, Dallas/Ft. Worth, El Paso, Houston Bush, Houston Hobby, Lubbock, San Antonio
Utah: Salt Lake City
Vermont: Burlington
Virginia: Norfolk, Richmond
Washington: Seattle, Spokane
Wisconsin: Madison, Milwaukee

For the ATPI for the following markets, go to http://www.bts.gov/xml/atpi/src/index.xml:

Alabama: Birmingham
Alaska: Anchorage
Arizona: Phoenix, Tucson
Arkansas: Little Rock
California: Burbank, Greater Los Angeles, Long Beach, Los Angeles, Oakland, Ontario, Sacramento, San Diego, San Francisco, San Jose, Santa Ana (Orange County)
Colorado: Colorado Springs, Denver
Connecticut: Hartford
District of Columbia: Washington, DC (Dulles and Reagan National combined)
Florida: Ft. Lauderdale, Ft. Myers, Jacksonville, Miami, Orlando, Tampa, West Palm Beach
Georgia : Atlanta, Savannah
Hawaii: Honolulu, Kahului (Maui), Kona, Lihue (Kauai)
Idaho: Boise
Illinois: Chicago (Midway and O’Hare combined)
Indiana: Indianapolis
Iowa: Des Moines
Kentucky: Louisville
Louisiana: New Orleans
Maryland: Baltimore
Massachusetts: Boston
Michigan: Detroit, Grand Rapids
Minnesota: Minneapolis/St. Paul
Missouri: Kansas City, St. Louis
Nebraska: Omaha
Nevada: Las Vegas, Reno
New Hampshire: Manchester
New Jersey: New York/Newark
New Mexico: Albuquerque
New York: Albany, Buffalo, Long Island, New York/Newark, Rochester, Syracuse
North Carolina: Charlotte, Greensboro/High Point, Raleigh/Durham
Ohio: Cincinnati, Cleveland, Columbus, Dayton
Oklahoma: Oklahoma City, Tulsa
Oregon: Portland
Pennsylvania: Philadelphia, Pittsburgh
Rhode Island: Providence
South Carolina: Charleston
Tennessee: Memphis, Nashville
Texas: Austin, Dallas/Ft. Worth, El Paso, Houston, San Antonio
Utah: Salt Lake City
Virginia: Norfolk, Richmond
Washington: Seattle, Spokane
Wisconsin: Milwaukee
Puerto Rico: San Juan

Brief Explanation of the ATPI

The ATPI is based on fares paid by travelers and draws its data from the BTS Passenger Origin and Destination Survey.  Through this survey, BTS collects information from the airlines on a 10-percent sample of airline tickets.  Each ticket sold is assigned an identification number, and if this number ends in 0, the ticket is in the sample.

The index measures the aggregate change in the cost of itineraries originating in the United States , whether the destinations are domestic or international, but only for U.S. carriers (excluding charter air travel). The ATPI is based on the changes in the price of individual itineraries, that is, round trips or one-way trips for which no return trip is purchased, and the relative value of each itinerary, for the set of matched itineraries.

The index uses the first quarter of 1995 as the reference point (expressed as the number 100) against which all subsequent quarterly prices are measured.  ATPI values below 100 represent overall “cost of flying” levels less than those in the second quarter of 1995, while values above 100 represent cost of flying levels that exceed those of the second quarter of 1995.  ATPI levels can be used to compute percentage changes in overall fare costs between any two quarters in an ATPI series. 

Unlike many other price index estimates, the ATPI is not based on a fixed “market basket” of air travel services.  Rather, all of the data from the Passenger Origin and Destination (O&D) Survey are fed into the estimation system each quarter, and this collection of itineraries varies from one quarter to the next.  New entry, including routes and carriers, will not be included in the ATPI calculations until it has been present in the O&D Survey for two consecutive quarters.

For price comparison purposes, itineraries flown in each quarter are “matched up” with identical or very similar itineraries flown in other quarters.  A price index formula is then used to compute aggregate index estimates such as those that appear in this release.

The fares reported in the O&D Survey include taxes, so the ATPI values reflect changes in tax rates as well as changes in fares received by the airlines. The ATPI values in this release are not adjusted for seasonality, so some movements in the series are due to seasonal variations in airfares.

The ATPI differs from the Bureau of Labor Statistics’ (BLS) airfare index, a component of the Consumer Price Index. The BLS index is based on fares advertised through SABRE, a leading computerized airline ticket reservation system, while the ATPI uses actual fares paid by travelers.  Since a growing number of tickets are purchased through the internet at discounted prices not listed with SABRE, the ATPI does not show the same levels of increases as the BLS index.