Price for plane tickets hits record high

updated 5:04 p.m. ET Oct. 29, 2008

DALLAS - Average U.S. air fares jumped 8.1 percent in the second quarter to their highest level since the government started keeping track 13 years ago.

The Transportation Department said Wednesday that the average domestic itinerary fare in the second quarter rose to $352, breaking the record of $348 set in the first quarter of 2001.

Airlines raised fees and fuel surcharges this year as they tried to offset high costs for fuel, which peaked at record levels in the first week of July — just after the second quarter ended. Even with the increases, however, most major U.S. airlines lost money in the quarter.

In the past two months, many airlines have cut back on the number of flights they operate, which could push fares even higher.

The Transportation Department based its figures on a sample of itineraries from April through June, excluding "abnormally high" fares.

The increase of 8.1 percent over the second quarter of 2007 was the biggest year-to-year increase since early 2006.

Average fares rose 4.6 percent from the first three months of the year, but fares typically rise in the second quarter because of stronger springtime demand — the last exception was in 2004.

Since hitting bottom at $307 in early 2005, average fares have risen 14.7 percent, and they've jumped nearly 45 percent since 1995, according to the department's Bureau of Transportation Statistics.

For the second straight quarter, the highest fares among the busiest 100 airports were in Cincinnati, where Delta Air Line Inc. has a hub, and the biggest increase — 21 percent — was at Greenville/Spartanburg, S.C.

The lowest fares were reported at Dallas Love Field, the home of Southwest Airlines Co., followed by Burbank, Calif., Houston's Hobby Airport, and Chicago's Midway Airport.

Transportation Secretary Mary E. Peters said new figures on fares showed the need for more competition at airports where the number of flights are capped.

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Peters said such caps can sometimes reduce delays, but she said fares rose 16 percent at the Newark, N.J., airport after caps were imposed in May. Caps "also eliminate competition, and without competition, airfares rise," she said.

Peters used the new figures to tout the department's proposal to auction takeoff and landing slots at congested New York-area airports. The Federal Aviation Administration delayed auctioning slots at Newark Liberty Airport this summer in the face of opposition to the plan from airlines.

David Castelveter, a spokesman for the Air Transport Association, said Peters was wrong about the cause of higher fares.

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"There is no shortage of low-fare competition — any competition — in New York," he said. "The meteoric increase in fuel prices, which affected all carriers, drove up the price of airline tickets."

The Transportation Department said a separate measure of fares, called the air travel price index, also hit an all-time high in the second quarter, rising 7.2 percent from the second quarter of 2007. The previous high for the index was set in the first quarter of this year.

The price index measures changes in fares based on identical routes and types of service, while the average-fares figure is a sample of the actual amounts paid by consumers, including taxes and fees.

In calculating average fares, the Transportation Department excluded certain expensive routes, cheap bulk prices and free trips redeemed by frequent fliers. It also excluded Alaska, Hawaii and Puerto Rico flights, although data from those places is available on the department's Web site.

Information from Spirit Airlines was left out because of faulty figures, the department said. That meant fares for Atlantic City, N.J., where Spirit is the dominant carrier, were not included in the national average.

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