Airfares Continue to Head South

Airline ticket prices are continuing their descent, reaching six-year lows.

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Airline ticket prices are continuing their descent, the federal government’s latest data show.

The U.S. Department of Transportation’s airfare report for the first quarter of 2016, which was released last week, shows that the average domestic airfare:

Decreased from $392 in the first quarter of 2015 to $361 in that period this year (7.8 percent) — the lowest first-quarter level since 2010.
Has decreased for the past five consecutive quarters.

These figures are adjusted for inflation and are based on round-trip ticket values unless a customer did not purchase a return trip. They do not reflect any additional taxes or fees, such as baggage fees.

The latest DOT data continue a downward trend. For example, the prior quarterly report showed that the average domestic airfare for last year as a whole — $377 — reached the lowest annual level since 2010.

Airlines’ revenues from passenger fares also appear to be descending. In the first quarter of this year, revenue from passenger fares comprised 73.8 percent of all scheduled passenger airline operating revenue, according to the DOT’s latest report.

Looking at the percentages that passenger-fare revenue comprised for entire years, it has not been that low since 2009.

Airline consultant Josh Marks tells CBS MoneyWatch:

“I think you’ll see airlines have lower profits than they would have expected for the back half of the year and for 2017. The major carriers are seeing a lot of competition on routes, particularly in leisure markets where they had a significant market share before. We’ve now seen growth by ultra-low cost carriers that are really offering rock bottom fares.”

CBS reports that ultra-low-cost airlines that have “grown aggressively” include: