Air transport and inflation in New Zealand

Small components of the New Zealand consumers price index (CPI) are made up of changes in the price of international (1.68%) and domestic (0.64%) air transport. In October 2009 Statistics New Zealand published details of how it measures price changes in these two components. With thousands of different tariffs available for air travel from and within New Zealand it is interesting to read an explanation of the methodology that the department uses.

Data for quarterly price movements in these components can be found using Infoshare. Go to "Economic indicators" then "Consumers Price Index" then "CPI Level 3 Classes for New Zealand". The numbers are currently indexed so that the base quarter ended June 2006 equals 1000. For the quarter ended September 2010 international air transport stood at 1018 (+1.80%) while domestic air transport dropped to 906 (-9.40%). Over the same four years and three months period the overall CPI had risen to 1111 (+11.10%). Note, however, the regular seasonal peaks in the international air transport price index.

In real terms the cost of air travel has been declining for decades, driven in part by technology change as airliners become more efficient, but also by increased productivity in the airline industry and greater competition following economic deregulation. This has been highlighted by the drive to become "low-cost" airlines. A trend to "no-frills" product, particularly for short-haul routes, has also been reducing the headline price of airfares as passengers now pay separately for extra services. Statistics New Zealand notes that it has made some adjustments for these quality of service changes.

In recent years, as well as jet fuel price increases (see previous post), pushing ticket prices in an upwards direction are the various taxes, levies and surcharges that are being imposed to meet increasing costs for activities such as airport services and security. These items are included in the above calculations.

More on the Philippines "open skies" debate

The President of the Philippines, Benigno Aquino, was reported by the Cebu Daily News on 11 November 2010 as talking about the potential benefits of his country adopting an "open skies" policy (see previous post). Quite what "pocket-sized open skies" would mean though is not clear.

Back on 11 September 2010 GMANews.TV reported on an interesting twist. It quotes a Department of Transportation and Communications (DoTC) official as saying that the Philippines Constitution requires that any such trade deal be reciprocal.

China starting to make available the texts of its air services agreements

In the English language part of its web site, the General Administration of Civil Aviation of China (CAAC) has started to make available the texts of China's air services agreements.

Unfortunately it seems some subsequent amendments, for example with New Zealand where the route schedule has been liberalised (see previous post), have yet to be made available. A work in progress?

More open air services arrangements between Yemen and Bahrain

On 17 October 2010 the Yemen new agency, Saba, reported that Yemen had signed a Memorandum of Understanding on air services with Bahrain. There are now no capacity limits and fifth freedom rights have been exchanged.

Timor Leste completes air services arrangements with Indonesia

On 1 November 2010 Antara News reported that a Memorandum of Understanding on air services had been signed between Timor Leste and Indonesia. Capacity is limited to 14 flights per week and fifth freedom rights are included.

On 2 November 2010 The Jakarta Post carried a short report on what use two Indonesian airlines plan to make of the new air services arrangements.