Fare Geek: Do the Feds track fares properly?

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We're always being told how much cheaper it is to fly today than in the past. But do official statistics exaggerate the savings?

I asked that question in a recent post on airfare price hikes that go unreported.

In response, Evan Sparks posted a few great points on his Aviation Policy Blog.

I had griped about how the famous Consumer Price Index (CPI) only tracks changes in base fares.

Problem one: The CPI doesn't track the base fares that passengers actually pay. It tracks the prices listed by the airlines in Sabre, which the government explains is "a reservation system used by many travel agencies. Thus, the CPI fails to reflect price changes that may be effected through special discounted prices and frequent-flyer awards." In other words, the official statistics on how much people are paying for air travel aren't actually reflecting what people are paying for air travel.

Problem two: The official statistics don't compare fares in an apples-to-apples way. Today's base fare doesn't buy you as much as a base fare did in, say, 1995. Services that used to be free (such as carrying a third bag of luggage, in-flight meals, and so forth) now require additional fees. So it's not fair for the Feds to say that ticket prices have dropped by X percentage when you're not getting as much for your dollar today as you did back then.

Evan Sparks views things differently. The fact that you only have to pay for the services you want is a good thing for consumers who didn't value those additional services. In other words, if you're willing to be nickel-and-dimed for meals and additional legroom in exchange for a lower base price, so be it.

He mentions the Bureau of Transportation Statistics’s Air Travel Price Index, and it's worth noting.

Unlike the CPI, this index is based on a 10 percent sample of domestic airline tickets, including taxes and fees, measured every three months. It should be more accurate than the CPI. It's not perfect, though: the Air Travel Price Index (ATPI) still doesn't adjust for either today's nickel-and-diming by airlines or the "stealth inflation" of deteriorating service. But, putting that aside, the statistics are enlightening...

Since 1995, the average fares for the top 85 markets have gone up substantially, according to the ATPI, which tracks actual fares people pay. The average is an 18 percent increase, but in some markets, such as Long Beach, Calif., (a base for discount carrier JetBlue Airways), fares have roughly doubled. See the chart here.

Now don't get me wrong. Obviously, the spread of discount carriers, such as Southwest and JetBlue, has helped lower fares, especially in particular markets. And I'm grateful for it! But I just think that the official statistics should be more accurate than they are.

Feel free to chime in, if you have an opinion.

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