Wednesday, January 20, 2016

Airline fares post net drop during 2015

Airline fares posted a net decline in December and ended the year with a total reduction of 3.0 percent according to the latest figures on the Consumer Price Index for All Urban Consumers (CPI-U) issued by the Bureau of Labor Statistics (BLS), U.S. Department of Labor.

The index for airline fares, which rose 1.5 percent in October and 1.2 percent in November, reversed course and dropped 1.1 percent in December, the BLS said in its Jan. 20 statement detailing the figures. The annualized decline was the third year in a row the index posted an overall drop.

The calculations of airline fares include an allowance for checked bag fees but the BLS does not include other ancillary charges which continue to rise and represent a larger percentage of airlines' overall revenue.

The agency found a certain percentage of passengers checked bags. It applies that percentage to all  incoming quotes during sample rotation and then assigns the appropriate checked bag fee (assuming one bag, for either one-way or round-trip, based on the description of the quote). It also applies baggage specs to airlines that do not charge for bags so that if they start to charge in the future, the BLS could easily incorporate that price increase.

The seasonally adjusted all items figure declined 0.1 percent in December. Over the last 12 months, the all items index rose 0.7 percent before seasonal adjustment.

The index for all items less food and energy rose 0.1 percent in December, its smallest increase since August. The index for shelter continued to rise, and the indexes for medical care, household furnishings and operations, motor vehicle insurance, education, used cars and trucks, and tobacco also increased in December. However, a number of indexes including airline fares declined, including those for apparel, personal care, new vehicles, and communication the BLS statement said.

The all items index rose 0.7 percent over the last 12 months, compared to the 0.5 percent 12 month increase for the period ending November. The food index rose 0.8 percent over the last 12 months, though the index for food at home declined. The energy index fell 12.6 percent, with all its major components decreasing. The index for all items less food and energy increased 2.1 percent over the last 12 months.

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