Airline Fares Continue to Rise in November CPI

Airline fares rose 3.5 percent in November after increating 6.3 percent in the October Consumer Price Index for All Urban Consumers, according to the Bureau of Labor Statistics (BLS), U.S. Department of Labor.

The jump in airline fares follows a 2.0 percent decline in September and stands in dramatic contrast to the overall CPI, which was up just 0.2 percent in November after being unchanged in October. Over the last 12 months, the all items index increased 1.2 percent before seasonal adjustment.


Frequent flyers know that airline fare index as reflected in the CPI don't tell the whole story.

Airlines continue to focus on increasing ancillary revenue, which carries an important caveat. While the BLS's calculations of airline fares include an allowance for checked bag fees, the BLS does not include other ancillary charges which represent an ever-larger percentage of airlines' overall revenue.

Although the three major U.S. carriers announced in September that they would eliminate the fees for changing tickets, other nickle-and-dime charges remain, and the carriers continue in lock step. While American Airlines (NASDAQ:AAL) and Delta Air Lines (NYSE:DAL) quickly followed Untied's (NYSE:UAL) lead in abolishing change fees earlier this year, in September 2018,AA, Delta, United and jetBlue (NASDAQ:JBLU) all raised fees for checked bags from $25 to $30 for the first bag, and from $35 to $40 for the second. While baggages fees are included, other similar nickle-and-dime charges are not tracked in the airline fare index.

The COVID-19 pandemic put downward pressure on prices.  When I returned to Seattle-Tacoma Internation (SEA) from Nashville, Tennessee International (BNA) on March 29, the "Main Cabins" of my two Delta Air Lines (NYSE:DAL) flights were perhaps 1/3 full. Now, with travel increasing, the prices are following suit.

The seasonally adjusted increase in the all items index was broad-based, with no component accounting for more than a quarter of the increase. The food index declined in November, as a decrease in the food at home index more than offset a small increase in the food away from home index. The index for energy rose in November, as increases in indexes for natural gas and electricity more than offset a decline in the index for gasoline.

In other areas, the indexes for lodging away from home, household furnishings and operations, recreation, apparel, and motor vehicle insurance all increased in November along with airline fares. The indexes for used cars and trucks, medical care, and new vehicles all declined over the month.

The all items index rose 1.2 percent for the 12 months ending November, the same increase as for the period ending October. The index for all items less food and energy rose 1.6 percent over the last 12 months, also the same increase as the period ending October. The food index rose 3.7 percent over the last 12 months, while the energy index fell 9.4 percent, the BLS said in its December 10 statement.

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