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Air Travel Price Index (ATPI) Up 1.8 Percent in Second-Quarter of 2005 from Second Quarter of 2004; Top Increase in San Jose, CA, Top Decrease in Cincinnati

Air Travel Price Index (ATPI) Up 1.8 Percent in Second-Quarter of 2005 from Second Quarter of 2004; Top Increase in San Jose, CA, Top Decrease in Cincinnati

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BTS 49-05
Dave Smallen
202-366-5568

Wednesday, October 26, 2005 - The Air Travel Price Index (ATPI) rose 1.8 percent in the second quarter of 2005 from the same period in 2004 (Table 1), marking the highest fare index of any April-to-June period since pre-Sept. 11 (Table 2), 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 year-to-year rise in the second-quarter level to 108.2 (1995 1st quarter = 100) was the first quarter in which the ATPI rose from the same period a year earlier since the second quarter of last year. There were three consecutive year-to-year decreases.

The largest year-to-year fare index increase for the second quarter among the 85 largest airline markets, ranked by passengers, was 8.0 percent in San Jose, CA, followed by Des Moines, IA, Ontario/San Bernardino, CA, Memphis, TN, and Phoenix, AZ (Table 4). The biggest year-to-year fare index decrease was 15.0 percent for itineraries originating in Cincinnati, OH. Other top fare decreases were recorded in Richmond, VA, Charleston, SC, Washington DC, and Hartford, CT.

The largest 10-year second-quarter fare index increase was 113.0 percent in Lihue (Kauai), HI. Three of the top five fare increases over this period took place at Hawaiian airports. Long Beach, CA, and Burbank/Glendale/Pasadena, CA, were the non-Hawaiian airports with the top fare increases (Table 5). The biggest second-quarter 10-year fare index decrease was 18.5 percent for itineraries originating in Manchester, NH, followed by Long Island, NY, Providence, RI, Philadelphia and West Palm Beach, FL.

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. The numbers are not adjusted for inflation.

The ATPI in the second quarter of 2005 was 3.2 percent below the level of the second quarter of 2001 when the index reached its highest point of any April-to-June period since the period covered by the data beginning in 1995 (Table 1).

The second-quarter 2005 index rose 4.1 percent from the first quarter 2005 level (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 2005 ATPI will be released in January 2006.

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 2005 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 of 2005 Since second quarter of ... Duration in years
1.8 2004 1
2.3 2003 2
1.7 2002 3
-3.2 2001 4
0.0 2000 5
6.0 1999 6
8.2 1998 7
4.5 1997 8
10.6 1996 9
7.0 1995 10

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
2005 108.2 1.8

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)
Quarter-to-Quarter changes may be affected by seasonal factors

Excel | CSV

Quarter and Year ATPI Percentage change from previous quarter
Second Quarter 2004 106.2 -2.2
Third Quarter 2004 102.6 -3.4
Fourth Quarter 2004 102.2 -0.4
First Quarter 2005 103.9 1.6
Second Quarter 2005 108.2 4.1

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

Table 4: Top Five Fare Increases and Decreases, 2004-2005 - Top 85 Air Travel Markets

(Air Travel Price Index Percentage Change, Second Quarter 2004 to Second Quarter 2005, First Quarter 1995 = 100)

Excel | CSV

Rank Origin Second quarter 2004 Second quarter 2005 Percentage change from 2004
  Largest Increases      
1 San Jose, CA 102.3 110.4 8.0
2 Des Moines, IA 95.4 103.0 8.0
3 Ontario/San Bernardino, CA 104.1 112.3 7.8
4 Memphis, TN 100.2 107.6 7.4
5 Phoenix, AZ 104.1 111.9 7.4
  ATPI for All U.S. Origins 106.2 108.2 1.8
  Largest Decreases      
1 Cincinnati, OH 120.3 102.3 -15.0
2 Richmond, VA 113.7 103.2 -9.3
3 Charleston, SC 119.2 110.6 -7.2
4 Washington, DC 105.3 99.2 -5.7
5 Hartford, CT 101.7 96.5 -5.2

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

Table 5: Top Five Fare Increases and Decreases, 1995-2005 - Top 85 Air Travel Markets

(Air Travel Price Index Percentage Change, Second Quarter 1995 to Second Quarter 2005, First Quarter 1995 = 100)

Excel | CSV

Rank Origin Second quarter 1995 Second quarter 2005 Percentage change from 1995
  Largest Increases      
1 Lihue (Kauai), HI 103.1 219.6 113.0
2 Kona, HI 102.4 181.2 77.0
3 Long Beach, CA 88.8 134.6 51.6
4 Honolulu, HI 101.5 151.1 48.9
5 Burbank/Glendale/Pasadena, CA 101.4 145.9 43.8
  ATPI for All U.S. Origins 101.1 108.2 7.0
  Largest Decreases      
1 Manchester, NH 99.4 81.1 -18.5
2 Long Island, NY 104.8 96.7 -7.7
3 Providence, RI 102.3 95.8 -6.4
4 Philadelphia, PA 102.5 97.4 -5.0
5 West Palm Beach/Palm Beach, FL 100.2 95.5 -4.6

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

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 (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 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.