BTS: US domestic air fare decreased in third quarter of 2015

WASHINGTON, DC – The average domestic air fare decreased to $372 in the third quarter of 2015, down 6.2 percent from $396 in the third quarter of 2014, falling to the lowest level since 2010, adjusted for inflation, the US Department of Transportation’s Bureau of Transportation Statistics (BTS) reported today.

BTS reports 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. One-way trips accounted for 34 percent of fares calculated for the second quarter of 2015. 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 fees for optional services, such as baggage fees. Averages do not include frequent-flyer or “zero fares,” or abnormally high reported fares. Constant 2015 dollars are used for inflation adjustment. The release of second-quarter air fare data was delayed from the previously scheduled release date because of the need to resolve data quality issues with airline submissions for the Origin & Destination database.

Inflation-Adjusted Air Fares

Third-quarter fares rose 11.9 percent from the recession-affected low of $338 in 2009 to the third quarter of 2011. Since 2011, third-quarter fares have shown little change, decreasing 1.7 percent from 2011 to 2015.

The third-quarter 2015 fare was down 19.4 percent from the average fare of $461 in 2000, the highest inflation-adjusted third quarter average fare in the 20 years since BTS began collecting air fare records in 1995. The 19.4 percent decline took place while overall consumer prices rose 37.0 percent. Since 1995, inflation-adjusted fares declined 16.8 percent compared to a 55.3 percent increase in overall consumer prices.

U.S. passenger airlines collected 75.0 percent of their total revenue from passenger fares during the third quarter of 2015, down from 87.6 percent in 1995.

Quarter-to-Quarter Change

Third-quarter fares were down 3.5 percent from the second quarter of 2015, dropping to the lowest inflation-adjusted level since the fourth quarter of 2010 when the average fare was $363.

In the three-year period from the third quarter of 2012 to the third quarter of 2015, inflation-adjusted fares decreased 1.5 percent. In the two-year period from the third quarter of 2013 to the third quarter of 2015, inflation-adjusted fares decreased 6.2 percent.

Unadjusted Air Fares

The $372 third-quarter 2015 average fare was down 6.2 percent from the third-quarter 2014 fare of $396, which was the highest average fare for any quarter since 1995. Since 1995, unadjusted fares rose 29.3 percent. Third-quarter fares were down 3.5 percent from the second quarter of 2015, dropping to the lowest unadjusted level since the third quarter of 2012 when the average fare was $367.