New trends in prices of air transport

Filed in archive Market Overview on December 6, 2006

Today, Logistics Management announced the results of a recent analysis about current trends in price of different transport modes. As the first part, I would like to start with the air transport because of its surprising price decrease during the October. Here is part of some summary of their analysis:

New analysis of trends in the domestic air freight industry has resulted in a substantial revision in our forecast. In October, the average price for shipping freight on scheduled flights run by U.S.-owned airlines dropped 1.3%. Thanks to a big 4.2% monthly price cut last August, average prices in October 2006, as reported by the U.S. Bureau of Labor Statistics, stood 1.2% below year-ago price levels. That was the first year-on-year price drop since June 2004. Thanks to recessionary fears, we think average annual inflation in domestic air freight as measured by BLS will now be only 3.9% in 2006, as opposed to the 5.4% rate we had been predicting. Accordingly, instead of a substantial acceleration in prices in 2007, our forecast now calls for a meager 0.2% inflation rate.