Airline fares continue to slide in November CPI

Airline fares dropped nearly a full percentage point in November following a 0.4 percent dip in October according to the monthly Consumer Price Index for All Urban Consumers (CPI-U) issued by the Bureau of Labor Statistics (BLS), U.S. Department of Labor.

The 0.9 percent drop in airline fares ran counter to the overall CPI-U, which rose 0.3 percent rise in November on a seasonally adjusted basis after rising 0.4 percent in October. Over the last 12 months, the all items index increased 2.1 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.

In September 2018, American Airlines (NASDAQ:AAL), United (NYSE:UAL), Delta Air Lines (NYSE:DAL) and jetBlue (NASDAQ:JBLU) raised fees for checked bags from $25 to $30 for the first bag, and from $35 to $40 for the second. In addition, jetBlue and Alaska (NYSE:ALK) also raised date-change fees. These and other factors are not tracked in the airline fare index.

Increases in the shelter and energy indexes were major factors in the seasonally adjusted monthly increase of the all items index. Increases in the indexes for medical care, for recreation, and for food also contributed to the overall increase. The gasoline index rose 1.1 percent in November and the other major energy component indexes also increased. The food index rose 0.1 percent, with the indexes for both food at home and food away from home increasing over the month.

The index for all items less food and energy rose 0.2 percent in November, the same increase as in October. Along with the indexes for shelter, for medical care, and for recreation, the indexes for used cars and trucks and for apparel also rose in November. The new vehicles index fell in November, as did the index for airline fares.

The all items index increased 2.1 percent for the 12 months ending November, a larger rise than the 1.8- percent increase for the period ending October. The index for all items less food and energy rose 2.3 percent over the last 12 months. The food index rose 2.0 percent over the last 12 months, while the energy index declined 0.6 percent over the last year, the BLS said in its December 11 statement.

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