Let the buyer know fares
By Bob Warner Philadelphia Daily News
How do airline fares from your city stack up against airfares from other cities? In Philadelphia, a hub for US Airways, we've always had the sense that our fares were on the high side. Planning a trip to the West Coast or overseas, you can usually save serious money by traveling up to Newark, N.J., or down to Baltimore. We've long been irked that it costs more to fly from Philadelphia to Pittsburgh, another US Airways hub, than to catch a flight all the way to Florida.
But how do you document the cost of air travel from Philadelphia or compare it to other cities? We never figured out a way until we noticed a brief item in The New York Times travel section, mentioning a Web site on airline fares, set up by the U.S. Transportation Department at http://ostpoweb.dot.gov/aviation/domfares/domfares.htm
With just a few hours' work after downloading several files and working them into Access and Excel, we calculated average fares per mile on the busiest air routes from Philadelphia and compared them to fare levels (known in the airline industry as "yields") on the busiest routes from other cities.
In our opinion, the results were newsworthy: average fares from Philadelphia in the period we looked at (the first quarter of 1998) were 24.2 cents a mile - third highest among the nation's 30 busiest air destinations, just behind Minneapolis (a Northwest Airlines hub, 25.5 cents a mile) and Dallas (an American Airlines hub, 24.8 cents a mile).
Preserving competition
The Transportation Department has assembled this data as part of a federal effort to deal with anti-competitive practices in the airline industry. The original source of the data is the airlines themselves, which are required to submit voluminous data every quarter that list the origin, destination, ticket price and more on 10 percent of all tickets they sell. The data is known inside the department as the "10 percent O & D" (for origin and destination).
What's posted on the Web is not the original data but tables derived from it, covering more than 1,100 of the busiest domestic air routes. For us, the most valuable table was the first one, which described each of 1,179 routes with the following information: origin and destination cities; the mileage between those cities; the average number of passengers each day; the average fare; the carrier with the largest market share and its average fare and market share; and the carrier offering the lowest average fare and its market share.
Other tables describe average fares from each city, changes in fare levels between 1997 and 1998, and more detailed information on specific airlines and market shares on specific routes.
Wobbly tables
The data goes back to the beginning of 1997 and is updated quarterly. There are several pitfalls.
First, the tables available on the Web do not differentiate between multiple airports in a single metropolitan area. For flights beginning or ending in Chicago, for example, there's no way to separate fares from O'Hare and Midway. For New York City, the problem is more difficult: flights using Newark Airport, where several low-cost carriers operate, are lumped together with flights from JFK and LaGuardia. Reporters in New York City would have to go to the original O & D data to deal with this problem.
Second, the federal data relies on calculations of an "average" fare for each city-to-city route. As airlines are quick to point out, in the real-life airline industry there's no such thing as an "average" fare. On most major routes, the airlines start with a three-tiered rate structure: first-class, short-notice "business" fares and lower-cost "leisure" fares requiring ticket purchases weeks in advance. But on top of that structure, each major airline has developed ways to modify its fare offerings around the clock - to deal with competitive pressures from other airlines and to confront the real-earnings specter of large blocks of empty, unsold seats.
US Airways told us that the federal study is seriously flawed because it fails to account for variances between business travel and leisure travel from different airports. We quoted the airline to this effect, but they didn't convince us to drop the story. In Philadelphia, we do have a relatively high proportion of business travel. But there is sufficient anecdotal evidence to suggest that this proportion is an effect - not a cause - of high local fares. Many leisure travelers, those paying for their own tickets, are traveling to other airports to save money, raising the business-to-leisure travel ratio further.
Third, working with the data, you have to be careful to avoid "averaging averages." If you're dealing with 40 different routes involving your local airport, you can't just add up the 40 "average" fares, add up the 40 distances, and divide to get an average fare per mile. You have to make adjustments based on how many passengers used each route. Fortunately, the posted federal data include the number of passengers traveling each route, enabling reporters to simply multiply to find figures for total passenger miles and total fares. (We made this mistake, though it's easy to avoid, in our first pass at the data.)
Bob Warner can be reached by phone at (215) 854-5885 or by e-mail at bwarner@philly.infi.net