A Transaction Price Index for Air Travel: Research on a Price Index Estimator Based on Data from a U.S. Department of Transportation Survey Involves Testing Unique Imputation and Across-Time Matching Procedures; the Resulting Experimental Index Is Compared with the Official CPI Series and the Consumer Expenditure Deflator Series Used in National Accounts Computations

By Lent, Janice; Dorfman, Alan H. | Monthly Labor Review, June 2005 | Go to article overview

A Transaction Price Index for Air Travel: Research on a Price Index Estimator Based on Data from a U.S. Department of Transportation Survey Involves Testing Unique Imputation and Across-Time Matching Procedures; the Resulting Experimental Index Is Compared with the Official CPI Series and the Consumer Expenditure Deflator Series Used in National Accounts Computations


Lent, Janice, Dorfman, Alan H., Monthly Labor Review


Special discount airfares, facilitated by the Internet and "frequent-flyer" programs, complicate efforts to measure changes in the price of commercial air travel. Endeavoring to fill their flights, airlines offer a variety of discount fares through several media (credit card points, supermarket coupons, and the like). The official Consumer Dice Index (CPI) for commercial air travel, however, is based on prices listed by the airlines in SABRE, a reservation system used by many travel agencies. Thus, the CPI fails to reflect price changes that may be effected through special discounted prices and frequent-flyer awards. This article reports on a study whose aim was to produce an index series based on actual prices paid by consumers. The most promising data set currently available for that purpose is the Transportation Department's Data Bank 1B, which contains data from the quarterly Passenger Origin and Destination (O&D) Survey, collected by the U.S. Government's Bureau of Transportation Statistics. These data are itinerary based: each observation consists of a fare (the actual fare paid, including tax), a sequence of airports and carriers, and other details of an itinerary traveled by a passenger or a group of passengers.

The Department of Transportation is developing plans to improve and expand the O&D Survey. The additional data that the Department plans to collect will greatly enhance analysts' ability to compute detailed price indexes: among the new data is detailed information regarding the sale of the airline ticket, as well as transaction fares for flights in the recorded itineraries. The Department also plans to improve the timeliness of the survey data. Currently, the data become available with a lag of 3 to 6 months--too late to be used in computing the airfare component of the CPI. This article examines research aimed at computing price indexes from the current O&D Survey data. The Bureau of Transportation Statistics will soon be publishing the new quarterly experimental Air Travel Price Index (ATPI) series, computed at a variety of aggregation levels.

A secondary goal of the research is to test the feasibility of computing price indexes from non-matched samples of customized items. The sample for the O&D Survey is selected independently each quarter and is a 10-percent sample of airline tickets from reporting carriers, both foreign and domestic. Each ticket having a serial number that ends in "0" is selected for the sample. For the purpose of this research, the O&D sample is treated as a simple random sample. Because the quarterly samples are independently selected and airline itineraries are customized, matching the data across time is the primary challenge. Large data sets (containing, for example, scanned-in data) with the prices of other types of customized items may well become available in the future. The current research will provide insight into the potential usefulness and limitations of such data sets for price index computation.

The next section compares the ATPI with two important airfare price indexes currently in use. Following that comparison, the methodological research undertaken in the development of the ATPI is discussed. Then, time plots of ATPI series, computed for research purposes, are presented. A discussion of possible directions for further investigation rounds out the text of the article. Most formulas and technical details are relegated to the appendix.

Comparison of airfare indexes

This section compares and contrasts the ATPI with two important airfare index series:

1. the BLS Consumer Price Index (CPI) for airline fares

2. the consumer expenditure deflator for airline fares, computed by the Bureau of Economic Analysis (BEA) and used in National Accounts estimation.

Comparing the experimental ATPI with the CPI. The Bureau of Labor Statistics currently publishes several price indexes for airfares: (1) a Consumer Price Index (CPI), (2) a Producer Price Index, and (3) international import and export price indexes. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

A Transaction Price Index for Air Travel: Research on a Price Index Estimator Based on Data from a U.S. Department of Transportation Survey Involves Testing Unique Imputation and Across-Time Matching Procedures; the Resulting Experimental Index Is Compared with the Official CPI Series and the Consumer Expenditure Deflator Series Used in National Accounts Computations
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.