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Average Air Fares Reach Highest Fourth-Quarter Level Since 2000; Top 100 Airports: Highest Fare in Anchorage, Lowest Fare at Dallas Love

Average Air Fares Reach Highest Fourth-Quarter Level Since 2000; Top 100 Airports: Highest Fare in Anchorage, Lowest Fare at Dallas Love

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BTS 19-07
Dave Smallen
202-366-5568

Wednesday, April 25, 2007 - Average air fares in the fourth quarter of 2006 reached the highest fourth-quarter level since 2000, rising 3.4 percent from the fourth quarter of 2005 (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 fourth quarter of 2006 was $378, up 3.4 percent from the average fare in the fourth quarter of 2005 but down 6.8 percent from the historic fourth-quarter high of $407 in 2000 (Table 1).

Average fares are based on domestic itinerary fares, round-trip or one-way for which no return is purchased. Averages include frequent-flyer fares.

Average air fares in the fourth quarter fell 3.0 percent from the third-quarter average of $391. The post-2001 high of $406 was set in the second quarter of 2006 (Table 2). Quarter-to-quarter changes may be affected by seasonal factors.

Of the top 100 airports based on passenger enplanements, the highest fourth-quarter average fares were in Anchorage, AK, followed by Cincinnati, Honolulu, San Francisco and New York John F. Kennedy International Airport. The lowest fares in the top 100 airports were at Dallas Love Field, followed by Chicago Midway International Airport, Houston William P. Hobby Airport, Islip, NY and Buffalo, NY (Table 3). See http://www.bts.gov/xml/atpi/src/index.xml for average fares for the top 100 airports. 

A separate measure of fares, the BTS Air Travel Price Index (ATPI) reached the highest fourth-quarter level recorded in the 11-year period measured by the index, 2.2 percent higher than the previous fourth quarter high in 2000 (Table 4) (1995 1st quarter = 100).

ATPI is a statistical index that documents quarterly changes in airline prices since the first quarter of 1995 using 5 million to 6 million tickets actually used by passengers for itineraries on U.S. carriers beginning in the United States. 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 level of fares paid by passengers. 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.

The different results from the fourth quarter of 2000 to the fourth quarter of 2006 demonstrate that ATPI and average fares, while similar, measure air fares in two different ways. 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.

First, low-cost carriers, which generally offer lower fares, now carry more than 27 percent of all domestic enplaned passengers, up from about 14 percent in 1995. Second, the network carriers have changed some of their fare rules, such as 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 for the fourth quarter of 2006 was 9.1 percent higher than the fourth quarter 2005 index (Table 5).

While reaching a fourth-quarter high, the ATPI declined for the second consecutive quarter and was down 5.5 percent from the record high set in the second quarter of 2006 (Table 6). Quarter-to-quarter changes may be affected by seasonal factors.

The largest year-to-year fare index increase for the fourth quarter among the 85 largest airline markets, ranked by passengers, was 16.1 percent in Long Beach, CA followed by Hartford, CT; Providence, RI; Charleston SC; Manchester, NH (Table 7).

The biggest year-to-year fare index decrease for the fourth quarter was 21.5 percent for itineraries originating in Lihue, HI. The top four fare decreases over this period took place at Hawaiian airports. Charlotte, NC, was the non-Hawaiian market with a top fare decrease (Table 7).

The largest fare index increases from the fourth quarter of 1995 to the fourth quarter of 2006 was 173.7 percent in Long Beach. The other top five fare index increases over this period took place at Lihue; Burbank/Glendale/Pasadena, CA; Kona, HI; and Phoenix (Table 8).

The only fourth-quarter 11-year fare index decreases were in Richmond, VA; Manchester; and Baltimore. The smallest increases were in Chicago and Denver (Table 8).

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 first-quarter 2007 ATPI and average fare data will be released on July 25.

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: Fourth Quarter Average Domestic Fares from Year-to-Year

Fares based on domestic itinerary fares, round-trip or one-way for which no return is purchased.

Excel | CSV

  Average Domestic Fares ($) Percent change from same quarter previous year
1995 358.71  
1996 369.16 2.9
1997 392.13 6.2
1998 380.61 -2.9
1999 383.76 0.8
2000 407.45 6.2
2001 352.21 -13.6
2002 362.19 2.8
2003 363.45 0.3
2004 348.19 -4.2
2005 367.17 5.5
2006 379.54 3.4

Source: Bureau of Transportation Statistics

Table 2: Air Travel Price Index and Average Domestic Airline Fares Since First Quarter 2005

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

Excel | CSV

  Air Travel Price Index Average Domestic Fares
Index Pct. Change Avg Fare ($) Pct. Change
First Quarter 2005 103.90   352.71  
Second Quarter 2005 108.20 4.1 362.24 2.7
Third Quarter 2005 109.20 0.9 359.98 -0.6
Fourth Quarter 2005 111.54 2.2 367.17 2.0
First Quarter 2006 114.57 2.7 381.99 4.0
Second Quarter 2006 120.61 5.3 406.43 6.4
Third Quarter 2006 117.43 -2.6 391.17 -4.3
Fourth Quarter 2006 114.03 -2.9 379.54 -3.0

Source: Bureau of Transportation Statistics

Table 3: Highest and Lowest Average Fares Fourth Quarter 2006

Top 100 Airports Based on Passenger Enplanements
Fares based on domestic itinerary fares, round-trip or one-way for which no return is purchased.

Excel | CSV

Rank Origin Fourth Quarter 2006
  Highest Average Fares  
1 Anchorage 537.00
2 Cincinnati 503.38
3 Honolulu 485.06
4 San Francisco 482.94
5 New York Kennedy 472.86
  Average Fare at All Airports 379.54
  Lowest Average Fares  
1 Dallas Love 235.34
2 Chicago Midway 270.04
3 Houston Hobby 277.46
4 Islip, NY 292.35
5 Buffalo-Niagara 295.58

Source: Bureau of Transportation Statistics

Table 4: Percent Changes to 2006 in the Air Travel Price Index

From Fourth Quarter Each Year Since 1995
U.S.-Origin Itineraries, Fourth Quarter to Fourth Quarter

Excel | CSV

Percent Change to Fourth Quarter 2006 Since... Duration in Years
2.2 2005 1
11.5 2004 2
7.0 2003 3
8.9 2002 4
10.9 2001 5
2.2 2000 6
12.1 1999 7
15.1 1998 8
5.8 1997 9
14.8 1996 10
15.2 1995 11

Source: Bureau of Transportation Statistics

Table 5: Year-to-Year Changes in the Air Travel Price Index (ATPI) Since 1995

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

Excel | CSV

Year ATPI Percent Change from 4th Quarter Previous Year
1995 98.96  
1996 99.30 0.4
1997 107.80 8.6
1998 99.09 -8.1
1999 101.73 2.7
2000 111.56 9.7
2001 102.86 -7.8
2002 104.73 1.8
2003 106.56 1.8
2004 102.24 -4.1
2005 111.54 9.1
2006 114.03 2.2

Source: Bureau of Transportation Statistics

Table 6: 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 and Year ATPI Percent Change from Previous Quarter
Fourth Quarter 2005 111.54 2.2
First Quarter 2006 114.57 2.7
Second Quarter 2006 120.61 5.3
Third Quarter 2006 117.43 -2.6
Fourth Quarter 2006 114.03 -2.9

Source: Bureau of Transportation Statistics

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

Table 7: Top Five Fourth Quarter Air Travel Price Index Increases and Decreases, 2005-2006

Top 85 Air Travel Markets
Air Travel Price Index Percent Change, Fourth Quarter 2005 to Fourth Quarter 2006
(First Quarter 1995 = 100)

Excel | CSV

Rank Origin Fourth Quarter 2005 Fourth Quarter 2006 Percent Change from 2005
  Largest Increases      
1 Long Beach, CA 139.23 161.64 16.1
2 Hartford, CT 100.24 112.88 12.6
3 Providence, RI 99.35 109.87 10.6
4 Charleston, SC 116.93 128.34 9.8
5 Manchester, NH 83.89 91.57 9.2
  ATPI for U.S. Origins 111.54 114.03 2.2
  Largest Decreases      
1 Lihue (Kauai), HI 222.79 174.93 -21.5
2 Kona, HI 184.01 149.86 -18.6
3 Kahului (Maui), HI 130.40 107.59 -17.5
4 Honolulu, HI 149.16 133.02 -10.8
5 Charlotte, NC 118.34 109.85 -7.2

Source: Bureau of Transportation Statistics

Table 8: Top Five Air Travel Price Index Increases and Decreases (Smallest Increases), 1995-2006

Top 85 Air Travel Markets
Air Travel Price Index Percent Change, Fourth Quarter 1995 to Fourth Quarter 2006
(First Quarter 1995 = 100)

Excel | CSV

Rank Origin Fourth Quarter 1995 Fourth Quarter 2006 Percent Change from 1995
  Largest Increases      
1 Long Beach, CA 59.06 161.64 173.7
2 Lihue (Kauai), HI 102.13 174.93 71.3
3 Burbank/Glendale/Pasadena, CA 95.72 159.10 66.2
4 Kona, HI 98.54 149.86 52.1
5 Phoenix, AZ 80.18 120.36 50.1
  ATPI for All U.S. Origins 98.96 114.03 15.2
  Largest Decreases/Smallest Increases      
1 Richmond, VA 102.93 97.76 -5.0
2 Manchester, NH 95.58 91.57 -4.2
3 Baltimore, MD 106.02 104.81 -1.2
4 Chicago, IL 105.12 105.41 0.3
5 Denver, CO 97.55 98.73 1.2

Source: Bureau of Transportation Statistics

For indexes 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 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.

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.