Average First-Quarter Domestic Air Fares Rose 4.4 Percent from 2007; Top 100 Airports: Highest Fare in Cincinnati, Lowest Fare at Atlantic City

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Contact BTS 36-08 Dave Smallen 202-366-5568

Wednesday, July 23, 2008 - Average domestic air fares in the first quarter of 2008 were up 4.4 percent from the first quarter of 2007 (Table 1) in the largest year-to-year increase since second quarter 2006, but average fares remained 4.6 percent below the January-to-March high set in 2001 (Table 6), 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 average fares increased 11.7 percent from the first quarter of 1995 to the first quarter of 2008 compared to a cumulative 41.0 percent inflation rate.  First quarter 2008 fares increased 4.4 percent from the first quarter of 2007 compared to a 4.0 percent inflation rate (Table 1).

The average domestic itinerary fare in the first quarter of 2008 of $332 was the highest average fare since the second quarter of 2006 (Table 2).  The first-quarter 2008 average fare was up 10.1 percent from the post-9/11 first-quarter low of $301 in 2005 (Table 6).

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.

Average air fares in the first quarter of 2008 rose 1.5 percent from the fourth-quarter 2007 average of $327 (Table 2). Quarter-to-quarter changes may be affected by seasonal factors.

Beginning with this release, BTS will 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 first-quarter average fares were in Cincinnati; followed by Greenville/Spartanburg, SC; Madison, WI; Knoxville, TN; and Grand Rapids, MI.  The lowest fares in the top 100 airports were at Atlantic City, NJ followed by Dallas Love, TX; Burbank, CA; Ft. Lauderdale, FL; and Las Vegas (Table 3). See the BTS Air Fare web page for average fares for the top 100 airports. 

The largest year-to-year average fare increase for the first quarter among the 100 largest airports, ranked by originating passengers, was 15.6 percent in Boston followed by Washington Dulles; Houston Bush; Washington Reagan National; and Chicago Midway (Table 4). 

The biggest year-to-year average decrease was 48.6 percent Atlantic City, NJ followed by Charleston, SC; Ft. Lauderdale, FL; San Francisco; and Atlanta (Table 4).

The largest average fare increase from the first quarter of 1995 was 187.2 percent at Dallas Love, followed by Lubbock, TX; Houston Hobby; El Paso, TX; and Las Vegas (Table 5).

The largest average fare decrease from the first quarter of 1995 to the first quarter of 2007 was 34.6 percent in White Plains, NY.  The other top five average fare decreases over this period took place at Manchester, NH; Newburgh, NY; Jackson, MS; and Pittsburgh (Table 5).

The Air Travel Price Index (ATPI)

A separate measure of fares, the BTS Air Travel Price Index (ATPI) was up 6.0 percent from the first quarter of 2007 to the first quarter of 2008, reaching the highest first-quarter level recorded in the 14 years of the ATPI (Table 8) (1995 1^st quarter = 100).  The ATPI is up 3.8 percent from its pre-9/11 first quarter high set in 2001 and up 16.8 percent from its post-9/11 first quarter low set in 2005 (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 base year of 1995.

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. 

The ATPI rose 2.3 percent from the fourth quarter of 2007 to the first quarter of 2008. Quarter-to-quarter changes may be affected by seasonal factors (Table 2).

The largest year-to-year fare index increase for the first quarter among the 85 largest airline markets, ranked by passengers, was 13.3 percent in Buffalo/Niagara, NY followed by Charlotte, NC; Boston; Washington; and Philadelphia (Table 9). 

The biggest year-to-year ATPI decrease for the first quarter was 6.1 percent for trips originating in Charleston, SC; St. Louis; Memphis, TN; Atlanta; and Seattle/Tacoma (Table 9).

The largest fare index increase from the first quarter of 1995 to the first quarter of 2008 was 68.8 percent in Burbank, CA. The other top ATPI increases over this period took place at Long Beach, CA; Ft. Myers, FL; New Orleans; and Greensboro/High Point, NC (Table 10).

There were no first-quarter fare index decreases for the 13-year 1995-to-2008 period.  The smallest increases were in Manchester, NH; Denver; Richmond, VA; Raleigh/Durham, NC; 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.  Second-quarter 2008 average fare data and the ATPI will be released on Oct. 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: First 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 Second 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 were revised from second-quarter 2007 press release issued on Oct. 24, 2007

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 First 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

(First Quarter to First Quarter for fares; March to March 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 First Quarter Each Year Since 1995
U.S.-Origin Itineraries, First Quarter to First 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 First Quarter to First Quarter (First Quarter 1995 = 100)

Excel | CSV

Source: Bureau of Transportation Statistics

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

Top 85 Air Travel Markets*
Air Travel Price Index Percent Change, First Quarter 2007 to First 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, First Quarter 1995 to First 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,: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: Atlantic City, 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 second 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.