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Second-Quarter 2004 Air Travel Price Index (ATPI) Airline Fares Up 0.4 Percent from 2003; Top Rise in Kona, Hawaii, Top Decline in Philadelphia

Second-Quarter 2004 Air Travel Price Index (ATPI) Airline Fares Up 0.4 Percent from 2003; Top Rise in Kona, Hawaii, Top Decline in Philadelphia

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BTS 29-04
Dave Smallen
202-366-5568

Wednesday, October 27, 2004 - The Air Travel Price Index (ATPI) rose 0.4 percent in the second quarter of 2004 from the same period in 2003, the U.S. Department of Transportation's Bureau of Transportation Statistics reported today.

The second-quarter level was 106.2 (1Q1995=100), following the smallest year-to-year second-quarter change in the nine years covered by the index (Table 2). The index has risen from the same quarter a year earlier each quarter since the third quarter of 2003.

The largest year-to-year fare increase among the 85 largest airline markets, ranked by originating passengers, was 15.8 percent in Kona, HI, and the top four fare increases all took place at Hawaii airports. Des Moines, IA, had the largest increase of any non-Hawaiian city (Table 4), although its index remains well below the overall ATPI for U.S.-origin itineraries. The biggest year-to-year fare decrease was 9.9 percent in Philadelphia. Other top declines were in San Juan, PR, Charlotte, NC, Boston and Ft. Lauderdale, FL.

The largest nine-year fare increase was 119.3 percent in Lihue (Kauai), HI. Four of the top five fare increases over this period took place at Hawaii airports. Long Beach, CA, had the largest increase of any non-Hawaiian city (Table 5). The biggest nine-year fare decrease was 15.8 percent in Manchester, NH, followed by Des Moines, Long Island, NY, Ft. Lauderdale and Grand Rapids, MI.

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.

Airline ticket prices in the second quarter of 2004 were 5.0 percent below their high in the second quarter of 2001. In the second quarter of 2001, fares reached their highest level of any second quarter since the base period in 1995 (Table 1).

In addition, second-quarter 2004 airfares fell 2.2 percent from the first quarter (Table 3). Quarter-to-quarter changes may be affected by seasonal factors.

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 third quarter 2004 ATPI will be released on Jan. 27, 2005.

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 a 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: Percentage Changes to 2004 in the Air Travel Price Index, from Second Quarter Each Year Since 1995

(U.S.-Origin Itineraries, Second Quarter to Second Quarter)

Excel | CSV

Percentage Change to Second Quarter 2004 Since... Duration
0.4 2003 One Year
-0.2 2002 Two Years
-5.0 2001 Three Years
-1.8 2000 Four Years
4.1 1999 Five Year
6.2 1998 Six Years
2.6 1997 Seven Years
8.6 1996 Eight Years
5.0 1995 Nine Years

SOURCE: BTS based on calculations using data from the BTS Passenger Origin and Destination Survey

Table 2: Year-to-Year Changes in the Air Travel Price Index (ATPI) since 1995

(for U.S.-Origin Itineraries, Second Quarter to Second Quarter, First Quarter 1995 = 100)

Excel | CSV

Year ATPI Percentage Change from Previous Year
1995 101.1  
1996 97.8 -3.3
1997 103.5 5.8
1998 100.0 -3.4
1999 102.1 2.1
2000 108.2 6.0
2001 111.8 3.3
2002 106.4 -4.8
2003 105.8 -0.6
2004 106.2 0.4

SOURCE: BTS based on calculations using data from the BTS Passenger Origin and Destination Survey

Table 3: Quarter-to-Quarter Changes in the Air Travel Price Index (ATPI) for the Latest Five Quarters

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

Excel | CSV

Quarter ATPI Percentage Change from Previous Quarter
Second Quarter 2003 105.8 -2.0
Third Quarter 2003 105.5 -0.2
Fourth Quarter 2003 106.6 1.0
First Quarter 2004 108.6 1.9
Second Quarter 2004 106.2 -2.2

SOURCE: BTS based on calculations using data from the BTS Passenger Origin and Destination Survey

Note: Quarter changes may be affected by seasonal factors

Table 4: Top Five Fare Increases and Decreases, 2003-2004 - Top 85 Air Travel Markets

(Air Travel Price Index Percentage Change, Second Quarter 2003 to Second Quarter 2004, First Quarter 1995 = 100)

Excel | CSV

  Second Quarter 2003 Second Quarter 2004 Percentage Change from 2003
Largest Increases      
1. Kona, HI 162.9 188.6 15.8
2. Lihue (Kauai), HI 196.2 219.3 11.8
3. Kahului (Maui), HI 126.2 139.5 10.5
4. Honolulu, HI 137.0 150.5 9.9
5. Des Moines, IA 89.8 95.4 6.2
ATPI for All U.S. Origins 105.8 106.2 0.4
Largest Decreases      
1. Philadelphia, PA 111.6 100.6 -9.9
2. San Juan, PR 122.3 113.5 -7.3
3. Charlotte, NC 132.1 123.0 -6.8
4. Boston, MA 104.3 98.1 -6.0
5. Ft. Lauderdale, FL 98.2 93.9 -4.4
5. Las Vegas, NV 122.7 117.3 -4.4

SOURCE: BTS based on calculations using data from the BTS Passenger Origin and Destination Survey

Table 5: Top Five Fare Increases and Decreases, 1995-2004 - Top 85 Air Travel Markets

(Air Travel Price Index Percentage Change, Second Quarter 1995 to Second Quarter 2004, First Quarter 1995 = 100)

Excel | CSV

   Second Quarter 1995 Second Quarter 2004 Percentage Change from 1995
Largest Increases      
1. Lihue (Kauai), HI 103.1 219.3 112.6
2. Kona, HI 102.4 188.6 84.2
3. Honolulu, HI 101.5 150.5 48.3
4. Long Beach, CA 88.8 128.9 45.1
5. Kahului (Maui), HI 102.1 139.5 36.6
ATPI for All U.S. Origins 101.1 106.2 5.0
Largest Decreases      
1. Manchester, NH 99.4 83.7 -15.8
2. Des Moines, IA 102.5 95.4 -7.0
3. Long Island, NY 104.8 97.6 -6.8
4. Ft. Lauderdale, FL 100.7 93.9 -6.7
5. Grand Rapids, MI 102.0 95.8 -6.0

SOURCE: BTS based on calculations using data from the BTS Passenger Origin and Destination Survey

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.