DOT Reports Air Fares Trending Up

airplaneAverage domestic air fares rose to $385 in the second quarter of 2012, up 4.1 percent from the average fare of $370 in the second quarter of 2011, the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) reports. Cincinnati had the highest average fare, $535, while Atlantic City, NJ, had the lowest, $166.

Not adjusted for inflation, the $385 second-quarter 2012 average fares reached an all-time high for any quarter, the DOT says. The previous high was $373 in the first quarter of 2012. The previous second-quarter high was $370 in 2011.  Second-quarter 2012 fares were $256 in 1995 dollars, down 15.4 percent from $302 in 1999, the inflation-adjusted high for any second quarter since BTS began collecting air fare records in 1995.

BTS, notes average fares based on domestic itinerary fares. Itinerary fares consist of round-trip fares unless the customer does not purchase a return trip. In that case, the one-way fare is included. Fares are based on the total ticket value which consists of the price charged by the airlines plus any additional taxes and fees levied by an outside entity at the time of purchase. 

Fares include only the price paid at the time of the ticket purchase and do not include other fees, such as baggage fees, paid at the airport or onboard the aircraft. Averages do not include frequent-flyer or "zero fares" or a few abnormally high reported fares.

Passenger airlines collected 70.8 percent of their total revenue from passenger fares during the second quarter of 2012, down from 1990 when 87.6 percent of airline revenue was received from fares.

Air fares in the second quarter of 2012 increased 13.5 percent from the second quarter of 2000, not adjusted for inflation, compared to an overall increase in consumer prices of 25.0 percent during that period. 

In the 17 years from 1995, air fares rose 29.7 percent compared to a 50.5 percent inflation rate). The average inflation-adjusted second-quarter 2012 fare in 1995 dollars was $256 compared to $297 in 1995 and $300 in 2000.

Unadjusted second-quarter 2012 fares were up 27.5 percent from the recession low of $302 in 2009 (Table 1).

Second-quarter fares increased 3.2 percent from the first quarter of 2012. Quarter-to-quarter changes may be affected by seasonal factors such as the number of passengers, DOT BTS notes.

In the last 18 years, U.S. airlines carried an average of 14.7 percent more originating passengers in the second quarter of the year than in the first quarter. The number of originating passengers rose by 14.0 percent in the second quarter of 2012 from the first quarter.

Cincinnati, a market with a high representation of business travelers, had the highest average fare ($535) while Atlantic City, a leisure-dominated market, had the lowest ($166).

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