U.S. Domestic Air Fares Tumble in Biggest Quarterly Drop Ever

Average domestic air fares dropped 9.1 percent in the first quarter of 2009 from the fourth quarter of 2008, the biggest quarter-to-quarter drop 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, reports average fares based on domestic itinerary fares, roundtrip or one-way for which no return is purchased.

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 paid at the airport or onboard the aircraft. Averages do not include frequent flyer or “zero fares” or a few abnormally high reported fares.

The $315 average first-quarter 2009 fares were down 5.9 percent from the first quarter of 2008 and down 12.5 percent from the record high average fares of $360 in the third quarter of 2008. First-quarter 2008 fares were also 9.4 percent below the pre-9/11 first-quarter high of $348 in 2001.

The $315 first-quarter 2009 average fare represented a lower rate of increase than inflation both from the first quarter of 1995, the first year of BTS records, and from the previous high for first-quarter fares set in 2001. In the 15 years from 1995, air fares rose 6.1 percent compared to a 40.5 percent inflation rate.

From 2001, when the previous first-quarter high was set, fares declined 9.4 percent compared to a 20.7 percent inflation rate. Since 2005, average fares have risen less than the inflation rate. First-quarter 2009 average fares rose 4.5 percent from the post-9/11 first-quarter low of $301 in 2005, less than the inflation rate of 10.0 percent.

A separate measure of fares, the BTS Air Travel Price Index (ATPI) dropped 8.5 percent in the first quarter of 2009 from its fourth-quarter 2008 level. The ATPI was down 4.4 percent from the first quarter of 2008 to the first quarter of 2009. The ATPI is down 0.8 percent from its pre-9/11 first-quarter high set in 2001 and up 11.6 percent from its post-9/11 first-quarter low set in 2005.