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Domestic Air Fares Drop in 4th Quarter

Average domestic air fares in the fourth quarter of 2008 were 3.7 percent lower, at $347, than the all-time quarterly high set in the third quarter of 2008 but were still the highest for any fourth quarter on record , the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) reported. BTS, a part of the Research and Innovative Technology Administration, reported that the 3.7 percent drop from the record high average fares of $360 in the July-to-September quarter to $347 in the October-to-December period was the biggest third quarter to fourth quarter decline in the 14 years for which BTS has records.

This decline was the third time in 14 years that fares have fallen from the third quarter to the fourth quarter. In the other 11 years, average fares rose from the third quarter to the fourth quarter. Quarter-to-quarter changes may be affected by seasonal factors. The $347 fourth-quarter 2008 average fares represented a lower rate of increase than inflation both from the fourth quarter of 1995, the first year of BTS records and from the previous high for fourth-quarter fares set in 2000. In the 14 years after 1995 air fares rose 20.4 percent compared to a 37 percent inflation rate. From 2000, when the previous fourth-quarter high was set, fares rose 1.9 percent compared to a 20.8 percent inflation rate. Since 2004, average fares have been increasing faster than inflation. Fourth-quarter 2008 average fares rose 16.6 percent from the post-9/11 fourth-quarter low of $297 in 2004, exceeding the inflation rate of 10.5 percent. Average fares are based on domestic itinerary fares, round-trip or one-way for which no return is purchased.

Fares include taxes and fees. Averages do not include frequent-flyer or “zero fares” or a few abnormally high reported fares. Average fares in this release may not be comparable to BTS fare press releases before the second quarter of 2007 which did not exclude frequent flyer fares or abnormally high fares. Bulk fares continue to be excluded as in earlier releases. Spirit Airlines data for the five quarters from the fourth quarter of 2007 to the fourth quarter of 2008 are not included in this release because the airline is updating its reports. Atlantic City, NJ, is not included because Spirit operates more than 90 percent of the flights there. The Atlantic City average fares in the July 23, 2008 press release were based on incorrect data. The data available on the BTS website for the second and third quarters of 2008 have been revised.

Revised Spirit Airlines data for the fourth quarter 2007 and the first quarter 2008 have yet to be received. Beginning with the first quarter 2008 release, BTS does not include Alaska, Hawaii and Puerto Rico airports in average fare totals and rankings. Of the top 100 airports based on originating passengers, the highest fourth-quarter average fares were in Cincinnati followed by Grand Rapids, Michigan; Knoxville Tennessee; Greenville/Spartanburg, South Carolina and Minneapolis/St. Paul, Minnesota.

The lowest fares in the top 100 airports were at Dallas Love, Texas followed by Long Beach, California; Las Vegas, Nevada; Orlando, Florida and Burbank, California. The largest year-to-year average fare increase for the fourth quarter among the 100 largest airports, ranked by 2007 originating passengers, was 32.8 percent in Newburgh, New York followed by Dallas Love, Texas; Minneapolis/St. Paul, Minnesota; Islip, New York and Chicago Midway, Illinois. The biggest year-to-year average decrease was 8 percent in Burlington, Vermont followed by San Francisco; Long Beach, California; Richmond, Virginia and Greensboro/High Point, North Carolina. The largest average fare increase from the fourth quarter of 1995 to the fourth quarter of 2008 was 215.5 percent at Dallas Love, Texas followed by Lubbock Texas; Colorado Springs, Colorado; El Paso, Texas and Houston Hobby.

The largest average fare decrease from the fourth quarter of 1995 to the fourth quarter of 2008 was 36.6 percent in White Plains, New York. The other top average fare decreases over this period took place at Manchester, New Hamsphire; Richmond, Virginia; Akron/Canton, Ohio and Rochester, New York.

by Staff Writer
Published April 18, 2009
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