Government says average airfares down in second quarter

WASHINGTON -- The average price of a plane ticket on U.S. airlines fell 4.5 percent in the second quarter from year-ago levels, the government said.

The average price of a domestic round-trip plane ticket fell to $326 in the second quarter, according to the Transportation Department's Bureau of Transportation Statistics. That price was 5.8 percent below the all-time, second-quarter high of $346 hit in 2000, but was above the 2005 second-quarter average of $306.75.

Among major airports, the highest average fares were found in Cincinnati. Rounding out the top five were Anchorage, Alaska, Greenville-Spartanburg, S.C., Knoxville, Tenn. and Charleston, S.C.

The lowest fares were found at three Hawaii airports, followed by Dallas Love Field and Chicago Midway Airport.

UAL Corp.'s United Airlines raised round-trip fares on nearly all of its domestic routes in mid-October and other major carriers followed suit. The airlines say they need to raise ticket prices to offset rising fuel costs, though analysts say the trend is also related to a shrinking availability of seats as carriers reduce capacity and passenger demand rises.

Fuel costs accounted for the largest piece of U.S. airlines' operating expenses in the second quarter of 2007 at 25.4 percent, followed by labor costs at 23.6 percent, according to the Air Transport Association.

The airfare increase would mark the eighth time major carriers succeeded in raising prices this year, JPMorgan airline analyst Jamie Baker said in a note to investors.

The drop in second-quarter fares came as the airline industry struggled with record levels of delays. The Transportation Department said in October that more than 25 percent of domestic flights arrived late between January and August -- easily the industry's worst performance since comparable data was first collected.