Air Travel Price Index

Air Travel Price Index

Commercial airlines offer a variety of discount fares to fill their flights, but these special airfares, facilitated by Internet commerce and "frequent flyer" programs, complicate efforts to measure changes in the prices people pay for commercial air travel. To improve these measurements, the Bureau of Transportation Statistics (BTS), in consultation with the Bureau of Labor Statistics (BLS), developed an Air Travel Price Index (ATPI) (box 7-A).

ATPI data can be used to compare changes in prices among many cities. In a comparison of three medium-sized cities, for instance, a dip appears between 1995 and 1998 for flights originating in Colorado Springs, Colorado (figure 7-7). During this time, the discount carrier Western Pacific operated flights from Colorado Springs, bringing airfares down before it withdrew from the market. Fluctuations in the ATPI of the major U.S. cities of New York, Los Angeles, and Chicago varied less than in Colorado Springs and the other selected medium-sized cities. The ATPI of the three selected U.S. cities collectively peaked in the first quarter of 2001 and have since declined (figure 7-8). Between the first quarter of 2001 and the fourth quarter of 2004, Chicago's ATPI declined by 21 percent, New York's by 15 percent, and Los Angeles' by 13 percent.

A comparison of the U.S. Origin and the Foreign Origin national-level ATPI reveals a diverging trend.1 While the "U.S. Origin Only" ATPI increased 2.2 percent from 1995 to 2004, the "Foreign Origin Only" ATPI decreased 9.8 percent over this same period (figure 7-9). Unlike the "U.S. Origin Only" ATPI, which peaked in the first quarter of 2001, the "Foreign Origin Only" ATPI has been trending downward since the third quarter of 1997, while maintaining its overall pattern of peaks in the third or fourth quarters followed by declines in other quarters.

1 The U.S. Origin ATPI only includes itineraries originating in the United States whether the destinations are domestic or international. The Foreign Origin ATPI includes itineraries with a foreign origin and a U.S. destination.