A transaction price index for air travel

Monthly Labor Review

Volumn 128, Issue 6, 2005, Pages 16-31

  Lent, Janice ^a   Dorfman, Alan H ^b  

^a US Research and Innovative Technology Administration   (United States)

^b Office of Survey Methods Research   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 28244495885     PISSN: 00981818     EISSN: 00981818     Source Type: Journal    
DOI: None     Document Type: Review

References (28)

1. Although the experimental ATPI series were originally computed with data from both foreign and domestic carriers, legal concerns from within the Department of Transportation required the suppression of the data from foreign carriers. Overall, the removal of those data resulted in minimal changes to the series presented.
2. For a detailed discussion of CPI methods, see BLS Handbook of Methods (Bureau of Labor Statistics, 1997), Chapter 17, "The Consumer Price Index," available on the Internet at www.bls.gov/opub/hom/home.htm.
3. For a discussion of alternative index formulas, see, for example, Irving Fisher, The Making of Index Numbers: A Study of Their Varieties, Tests, and Reliability (New York, Sentry Press, 1922);
4. W. Erwin Diewert, "Index Numbers," in John Eatwell, Murray Milgate, and Peter Newman, eds., The New Palgrave: A Dictionary of Economics, Vol. II (London, MacMillan, 1987), pp. 767-80;
5. or Brent R. Moulton, "Basic components of the CPI: estimation of price changes," Monthly Labor Review, December 1993, pp. 13-24 (on the Internet at http://www.bls.gov/opub/mlr/1993/12/art2full.pdf).
6. For more information on price index concepts and design, see Charles L. Schultze and Christopher Mackie, eds., At What Price? Conceptualizing and Measuring Cost-of-Living and Price Indexes (Washington, DC, National Academy Press, 2002).
7. See W. Erwin Diewert, "Exact and Superlative Index Numbers," Journal of Econometrics, May 1976, pp. 115-45.
8. See, for example, Ana M. Aizcorbe and Patrick C. Jackman, "The commodity substitution effect in CPI data, 1982-91," Monthly Labor Review, December 1993, pp. 25-33;
9. Matthew D. Shapiro and David Wilcox, "Alternative Strategies for Aggregating Prices in the CPI," Federal Reserve Bank of St. Louis Review, May/June 1997, pp. 113-25.
10. The methods and results described in these articles have been called into question by Alan H. Dorfman, Sylvia G. Leaver, and Janice Lent, "Some Observations on Price Index Estimators," Proceedings of the Federal Committee on Statistical Methodology Research Conference, Monday B Sessions (Federal Committee on Statistical Methodology, 1999), pp. 56-65.
11. The O&D Survey fares include zero-value fares (for example, for frequent-flier awards), which are imputed as S0.01. These imputations often result in extreme values for the unit-value indexes that serve as the "atoms" of the indexes presented in this article. (See later.)
12. For a discussion of the performance of the index formulas with respect to outliers in air-travel application, see Janice Lent, "Effects of Extreme Values on Price Indexes: The Case of the Air Travel Price Index," Journal of Transportation and Statistics, vol. 7, nos. 2-3, 2004, pp. 41-52.
13. If an itinerary straddles multiple quarters, it is counted in the quarter in which the first ticket in the itinerary is used.
14. See, for example, the findings of Steven Anderson and Richard Leonard, "Domestic Airline Industry Passenger Price Trends," internal document, Bureau of Transportation Statistics, April 26, 2004.
15. In the terminology used in this article, one segment involves exactly one aircraft takeoff and landing. Due to reporting deficiencies in the O&D Survey, some multiple-stop flights are currently being reported as nonstop flights, and the actual number of stops cannot always be determined. The Bureau of Transportation Statistics is working to correct this data-reporting problem.
16. Tests also were run that used the square root of the distance in place of the distance. The "square root of proportionate distance" method produced the same type of bias as the proportionate distance method, although the severity of the bias was somewhat reduced.
17. For formulas detailing the method of implicit imputation, see the appendix.
18. Copies are available from the authors upon request.
19. At least one researcher has identified such a bias. (See Jan De Haan, "Generalised Fisher Price Indexes and the Use of Scanner Data in the Consumer Price Index (CPI)," Journal of Official Statistics, March 2002, pp. 61-85.)
20. A description of the BLS estimation method is available on the Agency's Web site at http://www.bls.gov/cpi/cpifacaf.htm.
21. See, for example, Robert B. McClelland, "Evaluating Formula Bias in Various Indexes Using Simulations," 1996; on the Internet at http://www.bls.gov/ore/pdf/ec960140.pdf;
22. or Brent R. Moulton, "Bias in the Consumer Price Index: What Is the Evidence?" BLS working paper no. 294, 1996; on the Internet at http://www.bls.gov/ore/pdf/ec960170.pdf.
23. For a discussion of the change in index formulas, visit www.bls.gov/cpi/cpiadd.htm#4_1 on the Internet.
24. See Anderson and Leonard, "Passenger Price Trends."
25. For production purposes, the Bureau of Transportation Safety will define a new class of service comprising services provided by carriers that offer only one class of service. Thus, itineraries flown on carriers, such as Southwest, that report all their seats as first class will not be categorized as first class.
26. Note that, for all points of origin outside the United States, the O&D Survey indexes cover only itineraries incorporating some U.S. component.
27. Visit http://146.142.4.24/servlet/urveyOutputServlet?series_id= lausm85200003 for the Tucson employment and unemployment figures.
28. For details, see Janice Lent, "Chain Drift in Experimental Index Series," Proceedings of the Section on Survey Research Methods, American Statistical Association, Alexandria VA, Joint Statistical Meetings, San Francisco, CA, Aug. 8-12, 2003 (published on CD only).