Airfares Hit Five-Year High

The U.S. Department of Transportation’s Air Travel Price Index (ATPI) hit a five-year high last month, rising10.3 percent in the first quarter of 2006 over the first quarter of 2005. That was the biggest year-to-year rise since the start of the index in 1995. The DOT’s Bureau of Transportation Statistics said that the first quarter 2006 level of 114.6 (up from the index’s base line of 100 established in the first quarter of 1995) was the second highest level recorded in the 11 years the index has measured airfares. The highest was 116.9 in the first quarter of 2001. The ATPI is a statistical index that documents changes in airline prices using 5 million to 6 million tickets actually used by passengers each quarter. The index measures changes in airline ticket prices used on identical routings and identical classes of service on a quarter-by-quarter basis. Data showing lower “average fares” and lower “yields” published by other government agencies and industry organizations show that passengers are increasingly using lower fares by switching from the traditional, full service options that have existed since deregulation to more limited service on newer, low-cost carriers. The ATPI demonstrates that at present even the lower fares are rising, and the index values are a measure of how much they are rising. These higher fares probably are contributing to something rarely seen in the last five years: carriers (especially legacy carriers) reporting profits. United Airlines, US Airways, American Airlines and Continental all reported second quarter net profits. Low cost carriers including Southwest and JetBlue (which have always or usually reported profits) as well as Alaska Air, Frontier Airlines and Midwest Airlines all reported net incomes or profits for the second quarter. This is an unusual piece of good news for airlines, which, as an industry, last saw a profitable year back in 2001, according to the Air Transport Association. Between 2001 and 2005, the industry suffered a staggering $35 billion in net losses; in 2006 the ATA estimates the industry will post a half billion dollar net loss, a big improvement over its 2005 net loss of $5.7 billion. (Source: U.S. DOT, Modern Agent, ATA).

In response to a serious terrorist threat to international aviation security, the Secretary of Homeland Security has elevated the Homeland Security Advisory System Threat Condition to Severe, or Red, for all commercial flights from the United Kingdom to the United States, and to High, or Orange, for all other international flights and all domestic commercial aviation. The Transportation Security Administration (TSA) will be implementing a series of security measures – some visible and some not visible – to ensure the security of the traveling public and the Nation's transportation system. TSA is immediately implementing following changes to airport screening procedures:

NO LIQUIDS OR GELS OF ANY KIND WILL BE PERMITTED IN CARRY-ON BAGGAGE. ITEMS MUST BE IN CHECKED BAGGAGE. This includes all beverages, shampoo, suntan lotion, creams, tooth paste, hair gel, and other items of similar consistency. Exception: Baby formula, breast milk, or juice if a baby or small child is traveling; prescription medicine with a name that matches the passenger’s ticket; and insulin and essential other non-prescription medicines

• Passengers traveling from the U.K. to the U.S. will be subject to a more extensive screening process.

The traveling public can assist these agencies in carrying out their important security duties by:

• Packing lightly, without clutter to facilitate easier screening.

• Check with your air carrier well before your flight departs for information on when you should arrive at the airport.

• Cooperating with TSA personnel at all checkpoints and gates because TSA Security Officers will be checking carry-on baggage at the gate.

• Being attentive and vigilant to any suspicious activity (Source: TSA website).