How BLS Measures Price Change for Airline Fares in the Consumer Price Index
The Consumer Price Index (CPI) has included Airline Fares as a component of the Public
Transportation index since December 1963. The Public Transportation index is published in all
CPI publication areas on each area's publication cycle. The Airline Fares index is published
monthly at the U.S. level and is also seasonally adjusted.
Eligible for pricing are all regularly scheduled domestic and international commercial
airline trips on certified carriers departing from each of the 87 cities in the CPI sample.
For the selected cities that do not have a qualifying airport, the nearest city with a
qualifying airport is designated as the city of departure.
Excluded from pricing are trips in helicopters, trips on intra-Alaska carriers, and trips
designated as business travel.
The relative importance of an item category is its percent of the CPI weight as of December
of the most recent year. The airline fares index relative importance of 0.771 (Table 1)
signifies that it represented 0.771% of the All Items index as of December 2012.
Table 1: Relative Importance of Public Transportation components of the CPI for All
Urban Consumers (CPI-U): U.S. city average, December 2012
| Airline fares
| Other inter-city public transportation
| Intra-city public transportation
|| Unsampled public transportation
BLS selects approximately 1100 observations each month for its airline fares index. This sample
represents the non-business airline travel of the U.S. urban population.
In each of the 87 CPI pricing areas, a sample of trips is selected for pricing using those
cities as the points of origin. The specific trips to be priced are selected with probability
proportional to the value of each qualifying ticket included on the U.S. Department of
Transportation (DOT) data bank.
DOT data contain 10 percent of tickets sold by certified air carriers in
scheduled passenger service. Each record on the data tape includes all relevant information
about the particular trip in question. Included are such variables as points of origin and
destination, airline, class of service, and fare (First Class, Coach Full Fare, Coach Discount
Fare). The DOT data does not provide descriptions for specific discounts.
Reflecting the pattern of trips in the DOT data, the CPI sample of airline trips selected from DOT consists largely of discount fare service: 94 percent of the observations for discount service, 4 percent for full coach, and 2 percent for first class service. There are normally several discount fares for a given trip. Of the quotes priced for discount service, BLS assigns approximately half for the lowest available discount fare. The remaining half is for specific discount fares other than the lowest available fare.
Pricing the lowest available fare for half of the discount sample provides for an appropriate reflection of industry-wide sales typically referred to as "fare wars." Usually these deeply discounted fares are limited to the lowest available fare for a given trip. As seating for the lowest available fares is limited, BLS collects quotes for specifically selected discount fares other than the lowest available fare for the remainder of the sample.
Frequent Flyer discounts are not included in the index.
The CPI is currently transitioning pricing platforms from the SABRE reservation system to web-based pricing. Approximately half of the
current sample is priced on individual carrier websites and the remaining half is priced on Sabre. The entire sample will be collected via web
by the end of 2014. Web-based pricing enables the CPI to track a more defined trip month-to-month. For those areas that the CPI prices monthly,
the CPI obtains prices every month. The remaining cities are priced bi-monthly, with approximately half in even months and half in odd months.
Prices include all applicable taxes, domestic and international. Fuel Surcharges, Airport, Security, and baggage fees are also included. Care
is taken to spread pricing evenly throughout the month to give appropriate representation to price trends occurring within the month. Each
price reflects the purchase date of the ticket rather than the flight date, which, in the case of discount service, is typically a minimum of
1 to 4 weeks after the purchase date.
When an airline discontinues a discount fare that is being priced, BLS
substitutes the closest available alternative. Applicable restrictions may
change, such as advance purchase requirements, connecting airports, days of the week for which travel is valid, etc. When such changes occur, BLS estimates the value of the change. If the value of the change in quality is substantial, the prices for two discount fares in question will not be compared. In most cases, however, the quality difference between two such discount fares is considered trivial and the prices are compared and reflected in the CPI.
A change in the fare class designation for non-lowest discount fares usually leads to a much larger price differential. As the CPI wishes to follow specific non-lowest discount trips, such changes are not reflected in the CPI.
Additional information on the Consumer Price Index
can be found in the BLS Handbook of Methods,
chapter 17, "The Consumer Price Index," Bulletin 2490 (1997).
This chapter is also available on the BLS Internet site
(www.bls.gov/opub/hom/homch17_a.htm). For more information, call the Information and Analysis Section of the CPI at (202) 691-7000.
Last Modified Date: September 17, 2013