Hopper’s Consumer Airfare Index Increases 4.7% in March

Patrick Surry - Mar. 3, 2015


  • Domestic airfare increased 4.7% between February and March, in anticipation of spring and summer travel

  • Prices are 9.4% cheaper this year as compared to last year

  • Airfare from Dallas rose by a whopping 20.8%, while airfare from Fort Myers dropped by 4.9%

  • We predict that peak prices this summer to be $17 cheaper than last year, a decrease of 5.7%

Tracking Domestic Airfare in March

Hopper's Consumer Airfare Index increased by 4.7% from February to March, reflecting increased demand for upcoming spring and summer travel. This puts the average price of a round-trip domestic flight at $249, up from $238 last month. This jump follows eight months of declining or nearly flat prices, ending with a 3.3% decline in February. Screen Shot 2015-04-19 at 3.05.05 PM

The March increase is not surprising, as fares regularly increase in the spring to account for increased demand. Last year, our index increased by 5.4% in February and 2.7% in March -- an earlier peak than this year.

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While the current increase is largely seasonal, it’s noteworthy that last month’s average fare has declined 9.4% from March 2014, when it was estimated at $275. Prices at the beginning of last year were unusually elevated compared to the previous year, before dropping in the second half of the year. After a particularly steep decrease in February, prices this year are still well below last year’s despite the increase in March. While prices will likely increase further this spring, consumers have so far been enjoying better deals and can expect more of the same through the rest of the year.

On average, consumers were searching for flights over 60 days ahead in March - a number considerably higher than what we’ve historically observed. This puts the average departure date in May or early June, the beginning of the summer travel season. Last year at this time, the average search was only 53 days in advance.

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Biggest Price Increases and Decreases

Not all markets experienced the same price changes last month. Here are airports where departing domestic flights saw the biggest average increases in price from February to March:

Departure Airport Feb. Price Mar. Price % Change in Price % of Domestic Traffic
Dallas (DAL) $265 $320 20.76 0.69
Houston (HOU) $296 $354 19.73 0.83
Miami (MIA) $216 $247 14.33 1.39
San Jose (SJC) $218 $249 14.29 0.67
Santa Ana (SNA) $214 $243 13.58 0.67

While these increases can be particularly dramatic, they mostly reflect routes with disproportionately large seasonal effects and routes that had previously been unusually cheap. For example, flights departing from Dallas may have been 20.8 percent more expensive last month than in February, but the price in February was exceptionally low, over $70 cheaper than in 2014. So while the increase last month was particularly large, prices still ended up being 4.8% cheaper than in March 2014, and we expect prices in June and July to be comparable to last year. Despite the overall increase in airfare, some airports actually experienced decreases in average prices:

Departure Airport Feb. Price Mar. Price % Change in Price % of Domestic Traffic
Fort Myers (RSW) $221 $210 -4.86 0.73
Sacramento (SMF) $240 $231 -3.52 0.64
Fort Lauderdale (FLL) $196 $191 -2.62 1.54
Kansas City (MCI) $190 $186 -2.19 0.74
Denver (DEN) $198 $196 -1.24 3.65

Like some of the price increases above, these changes mostly reflect recent pricing patterns for particular routes. For example, prices for flights departing from Fort Myers decreased a substantial 4.9% last month. Taking a closer look at individual destinations, it’s clear that this decrease is driven by a dramatic 45% decrease in the price of flights to Atlanta due to a fare sale. Since flights to Atlanta comprise nearly 13% of all departing flights from Fort Myers, this had a huge effect. Excluding this anomalous data, the price change in March was actually a more seasonally-appropriate 1.7% increase.

Mapping Prices by State

The map below shows the current price index for flights departing from each state, illustrating how prices can vary across the country: Screen Shot 2015-04-19 at 3.15.24 PM

It’s no surprise that more sparsely-populated states with fewer airports have higher prices. Wyoming, Delaware, and North Dakota top the list with average prices over $400, while Massachusetts, Colorado, and Missouri are at the bottom with prices just over $200.

Smaller states also tend to have more volatile prices, and there were some pretty dramatic increases last month. Here are the biggest winners and losers, compared to the nationwide price increase:

 Screen Shot 2015-04-19 at 3.16.46 PM While the figures above show how much it costs to fly from a given state, it’s also interesting to see how much it costs to fly to a given state: Screen Shot 2015-04-19 at 3.18.18 PM

The pattern here is very similar: it’s more expensive to get to more remote states with smaller and fewer airports. To instead see how much it costs to fly to each state from your home airport, check out Hopper's Consumer Airfare Index map.

Forecasting 2015

Looking forward to the rest of 2015, we anticipate that prices will continue to increase throughout the rest of spring and the beginning of the summer, with the largest increase in May (7%) and peak prices in June ($280). Relative to last summer’s peak of $297, peak prices are $17 and 5.7% cheaper.   Screen Shot 2015-04-19 at 3.25.37 PM

Why do we think peak prices will be so much cheaper this year? It’s mostly due to how late and low prices bottomed out this winter relative to last year. Last year the index reached its lowest point in January, at $254, before rebounding strongly in February and March. This year, prices were even lower in January and continued to fall in February. As of March, prices are still below their January 2014 level, and with only a few months of peak shopping season left prices can only go so high.

Beyond this summer’s peak, if you’re already thinking about holiday travel, prices aren’t expected to rise again until September, when they’ll increase steadily through November. As the year goes on, we’ll have a better idea of when, generally speaking, to buy your tickets for Thanksgiving or the winter holidays.

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Our airfare index combines search data for every origin and destination in the United States, providing a near real-time estimate of overall airfare prices - unlike other comparable indices that can lag by several months.

Other indices simply take the average of all fares to represent overall price which skews the results toward expensive fares and can give an unrealistic impression of the true cost of flying. We instead use what we consider to be a “good deal” for each route to reflect what consumers should reasonably expect to pay.

Since our index is constructed and forecasted at the origin-destination level, we can also provide comparable estimates for any combination of routes and extract insights on pricing not only across time, but also across different markets. We use monthly passenger data from the Bureau of Transportation Statistics to ensure that each domestic route is properly represented in the final index based on its share of total passengers.

When predicting future prices, we also consider a few key features of airline pricing. First, prices within a given route will fluctuate with the number of passengers.

Second, prices change predictably with the seasons, especially during the peaks of summer and holiday travel. Of course, much of this variation has to do with increased demand - but in peak travel seasons, airlines can raise prices not only because there are more people interested in travelling, but also because the average traveler is willing to pay more for their summer vacation or trip home for the holidays.

Finally, changes in prices may persist, especially if there are underlying conditions pushing prices up or down, as these effects may be spread over several months. Conversely, the opposite may be true - after a big price increase or drop, fares are more likely to change in the opposite direction in future months. Since dynamics like these and the above aren’t always consistent, we evaluate future prices at the origin-destination level to capture the unique properties of pricing for different routes.

Of course, predicting the future is no easy task, and many factors that influence pricing are simply unforeseeable. However, by exploiting the factors that are predictable, like trends in passenger distribution, seasonal variation, and recent price activity, it’s possible to extract insights about the near future of pricing.

Historical Analysis and Comparisons

Our index generally tracks the Bureau of Labor Statistics’ Airfare Consumer Price Index, which is a similar aggregation of the prices consumers pay to fly.

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We must also consider how our forecast would have performed in the past, given the data that was available at the time. Three months ago, we would have computed a forecast with similar dynamics but a very different price level:

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While the January forecast predicts a big price increase in February, we actually observed a decrease. This puts the new forecast at a permanently lower level throughout 2015, highlighting the importance of the unusual February data to our projection. Had the index increased in February, we would have predicted summer peak prices to be broadly consistent, if perhaps a bit lower, than last year’s.

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