Airline fares rise in August CPI

Airline fares rose a total of 9.2 percent in June and July, partially offsetting a plummet of nearly 20 percent across April and May, according to data issued by the Bureau of Labor Statistics (BLS), U.S. Department of Labor.

The 1.2 percent increase in airline fares contributed to the slight rise in the overall August Consumer Price Index for All Urban Consumers (CPI-U), which rose 0.4 percent for the month on a seasonally adjusted basis. Over the last 12 months, the all items index increased 1.3 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.

Clearly, 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 lockdown lifting and travel increasing, the prices are following suit.

Overall, the monthly CPI increase in the seasonally adjusted all items index was broad-based; a sharp rise in the used cars and trucks index was the largest factor, but the indexes for gasoline, shelter, recreation, and household furnishings and operations also contributed. The energy index rose 0.9 percent in August as the gasoline index rose 2.0 percent. The food index rose 0.1 percent in August after falling in July; an increase in the food away from home index more than offset a slight decline in the food at home index.

The index for all items less food and energy rose 0.4 percent in August after increasing 0.6 percent in July. The sharp rise in the index for used cars and trucks accounted for over 40 percent of the increase; the indexes for shelter, recreation, household furnishings and operations, apparel, and motor vehicle insurance also rose. The indexes for education and personal care were among the few to decline.

The all items index increased 1.3 percent for the 12 months ending August; this figure has been rising since the period ending May 2020, when the 12-month increase was 0.1 percent. The index for all items less food and energy increased 1.7 percent over the last 12 months. The food index increased 4.1 percent over the last 12 months, with the index for food at home rising 4.6 percent. Despite recent monthly increases, the energy index fell 9.0 percent over the last 12 months, the BLS said in its September 11 statement.

Visit my main page at TheTravelPro.us for more news, reviews, and personal observations on the world of upmarket travel.



If you found this article helpful, informative and/or entertaining, please consider making a donation via PayPal to help support this private project.


Comments