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U.S. Airfares Rose to 13-Year High in 2nd Quarter (Update1)

By Mary Schlangenstein

Oct. 29 (Bloomberg) -- U.S. domestic airfares climbed to an average of $352 in the second quarter, the highest price since a federal agency began monitoring the data 13 years ago.

The average rose 8.1 percent from a year earlier, eclipsing the previous mark of $348, set in 2001's first quarter, the Bureau of Transportation Statistics said in a statement today. The figures reflect mainly round-trip fares, while including some one-way prices, said Dave Smallen, an agency spokesman.

The record price underscores Air Transport Association data that show yields, or average fares per mile, increased each month through September in 2008 from a year earlier. Airlines have been boosting fares and adding fees to help stem losses from jet-fuel prices that rose to a record in July.

``In a quarter with record high oil prices, airlines had no choice but to buttress their finances with necessary fare increases,'' said Douglas Runte, an analyst at Piper Jaffray & Co. in New York. ``As capacity cutbacks accelerated in the third and fourth quarters, we would expect to see further significant increases'' into 2009.

Average fares rose 18.5 percent from the second quarter of 1995, the year the bureau began monitoring them. The cumulative inflation rate for the same period was 44.5 percent.

The fare data include taxes and fees, and exclude frequent- flier tickets or abnormally high prices reported by airlines, the agency said.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

Last Updated: October 29, 2008 14:47 EDT

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