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Domestic air fare decreased in third quarter of 2016

The average domestic air fare decreased to $344 in the third quarter of 2016, down 8.8 percent from $377 in the third quarter of 2015, adjusted for inflation, the U.S.

The average domestic air fare decreased to $344 in the third quarter of 2016, down 8.8 percent from $377 in the third quarter of 2015, adjusted for inflation, the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) reported today.

BTS reports average fares based on domestic itinerary fares. Itinerary fares consist of round-trip fares, unless the customer does not purchase a return trip. In that case, the one-way fare is included. One-way trips accounted for 38 percent of fares calculated for the third quarter of 2016. The average domestic one-way air fare was $242 in the third quarter of 2016, while the average round-trip air fare was $424. Fares are based on the total ticket value, which consists of the price charged by the airlines plus any additional taxes and fees levied by an outside entity at the time of purchase.

Fares include only the price paid at the time of the ticket purchase and do not include fees for optional services, such as baggage fees. Averages do not include frequent-flyer or “zero fares.” Constant 2016 dollars are used for inflation adjustment.

Inflation-Adjusted Air Fares

Third-quarter fares rose 17.2 percent from the recession-affected low of $343 in 2009 to the third quarter of 2014. In the two-year period from the third quarter of 2014, fares fell 14.4 percent to the third quarter of 2016.

The third-quarter 2016 fare was down 26.5 percent from the average fare of $468 in 2000, the highest inflation-adjusted third quarter average fare in the 21 years since BTS began collecting air fare records in 1995. Since 1995, inflation-adjusted fares declined 24.1 percent.

In recent years, airlines have obtained additional revenue from fees charged to passengers, as well as from other sources. U.S. passenger airlines collected 74.7 percent of their total revenue from passenger fares during the third quarter of 2016, down from 87.6 percent in 1995.

Quarter-to-Quarter Change

Average fares have declined for seven consecutive quarters after reaching an inflation-adjusted recent high of $404 in the fourth-quarter of 2014.

Unadjusted Air Fares

The $344 third-quarter 2016 average fare was down 13.2 from the third quarter 2014 fare of $396, which was the highest average fare for any quarter since 1995. Since 1995, unadjusted fares rose 19.6 percent compared to a 57.6 percent increase in overall consumer prices.

Third-quarter 2016 fares were down 2.4 percent from the second quarter of 2016, dropping to the lowest unadjusted level since the fourth quarter of 2010 when the average fare was $335.