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First Quarter Airline Fares Up 0.6 Percent from 2003; Top Decline in San Juan, Top Rise in Kona

First Quarter Airline Fares Up 0.6 Percent from 2003; Top Decline in San Juan, Top Rise in Kona

BTS 20-04
Dave Smallen
202-366-5568

Wednesday, July 28, 2004 - The Air Travel Price Index (ATPI) rose 0.6 percent in the first quarter of 2004 from the same period in 2003 (Table 1), the Department of Transportation’s Bureau of Transportation Statistics reported today.

The first quarter level was 108.6 (1Q1995=100), the highest first quarter since 2001.

The biggest year-to-year fare decrease among the 85 largest airline markets, ranked by originating passengers, was 8.1 percent in San Juan, Puerto Rico. Other top declines were in Santa Ana (Orange County) CA, Boston, Las Vegas and Long Beach. The largest year-to-year fare increase was 21.4 percent in Kona, Hawaii. In fact, the top four fare increases all took place at Hawaii airports. Richmond had the largest increase of any other city (Table 4).

The biggest eight-year fare decrease was 13.3 percent in Manchester. Other top declines were in Grand Rapids, Raleigh/Durham, Des Moines and Orlando. The largest eight-year fare increase was 216.7 percent in Lihue (Kauai). Four of the top fare increases took place at Hawaii airports. Anchorage had the largest increase of any other city.

The ATPI is a quarterly measure of changes in airfares since the first quarter of 1995 for itineraries on U.S. carriers beginning in the United States. The ATPI was released for the first time in March 2004.

ATPI shows that airline ticket prices in the first quarter of 2004 were 7.1 percent below their high in the first quarter of 2001. In the first quarter of 2001, fares reached their highest level of any first quarter since the base period in 1995 (Table 2).

In addition, first-quarter 2004 airfares rose 1.91 percent from the fourth quarter of 2003. Quarter-to-quarter changes may be affected by seasonal factors. The fourth quarter 2003 ATPI, previously reported as 106.33, has been revised upward to 106.56 to reflect records received late from the reporting carriers (Table 3). Several city ATPIs have also been revised.

Additional information about the ATPI, including indexes for foreign-origin itineraries and the top 85 air travel markets based on originating passengers, can be found on the BTS website, http://www.bts.gov/xml/atpi/src/index.xml. The second quarter 2004 ATPI will be released in October.

Cities covered are:

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

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

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, Raleigh/Durham

Ohio: Cincinnati, Cleveland, Columbus, Dayton

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

The ATPI series are computed using price index methodology similar to that used by other federal statistical agencies. Although the ATPI is computed using a tested index methodology, the effective application of this methodology to the airlines' data is still under development and it is considered a research series at this time.

Table 1: Percent Changes for U.S.-origin flights from Previous Years to 2004

First Quarter to First Quarter

Excel | CSV

Percent change to First Quarter 2004 Since . . . Duration
0.6 2003 One Year
0.4 2002 Two Years
-7.1 2001 Three Years
2.3 2000 Four Years
6.3 1999 Five Years
3.9 1998 Six Years
6.5 1997 Seven Years
10.0 1996 Eight Years
8.6 1995 Nine Years

SOURCE: BTS, 2004

Table 2: First Quarter ATPI - U.S.-origin (First Quarter 1995 = 100)

Excel | CSV

  ATPI Percent change from previous year
1995 100.00 .
1996 98.73 -1.3
1997 101.99 3.3
1998 104.55 2.5
1999 102.20 -2.2
2000 106.13 3.8
2001 116.94 10.2
2002 108.18 -7.5
2003 107.98 -0.2
2004 108.59 0.6

SOURCE: BTS, 2004

Table 3: Quarter-to-Quarter Change in ATPI for Five Quarters for U.S.-origin Itineraries

(First Quarter 1995 = 100). Quarter-to-quarter changes may be affected by seasonal factors.

Excel | CSV

  ATPI Percent change from previous quarter
First Quarter 2003 107.98 3.1
Second Quarter 2003 105.79 -2.0
Third Quarter 2003 105.53 -0.2
Fourth Quarter 2003 106.56 1.0
First Quarter 2004 108.59 1.9

SOURCE: BTS, 2004

Table 4: Top 80 Air Travel Markets - Top Five Fare Increases and Decreases

First Quarter 2002 to First Quarter 2003 (First Quarter 1995 = 100)

Excel | CSV

  First Quarter 2003 First Quarter 2004 Percent change from previous year
Largest Increase      
Kona, HI 149.91 181.97 21.4
Lihue (Kauai), HI 180.70 216.70 19.9
Kahului (Maui), HI 117.67 136.99 16.4
Honolulu, HI 128.71 144.02 11.9
Richmond, VA 105.68 116.05 9.8
U.S.-Origin ATPI 107.98 108.59 0.6
Long Beach, CA 129.72 124.27 -4.2
Las Vegas, NV 126.38 120.92 -4.3
Boston, MA 105.93 101.16 -4.5
Santa Ana (Orange Cty), CA 109.96 103.59 -5.8
San Juan, PR 124.41 114.40 -8.0
Largest Decrease      

SOURCE: BTS, 2004

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 first quarter of 1995, while values above 100 represent cost of flying levels that exceed those of the first 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.

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.

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.