"Stuff gets more expensive every year. Why, when I was a kid we could take the streetcar down to Coney Island every Saturday for a nickel. Nowadays, it's highway robbery on the D Train."
Such is the simplistic lament of many who don't understand inflation. However, do they have a point, at least with regard to transportation? In real terms, is it more expensive to move around now than it was in, say, 2002? A comparison of car, airline ticket and train ticket prices from both a decade ago and today may surprise you.
While gas prices have shot up over the last few years and financing has gone in the opposite direction, what about cars themselves? According to Center for Transportation Analysis at Oak Ridge National Laboratory, prices reached their height in the late 1990s and have been falling ever since.
Breaking it down by place of origin, the fall is almost entirely attributable to foreign vehicles. The average price of an import has dropped 20% since 2002, with domestics remaining more or less unchanged. In fact, were it not for the unfortunate turn in what it costs to fill your tank, today would represent the best time since the early 80s in which to own a car.
It's hard to reconcile this with modern life, but in generations past, air travel was exclusive to the rich. As recently as the late 1950s, more people were still crossing the Atlantic via steamer than through the air.
With the 1970s came deregulation and the mercy killing of the Civil Aeronautics Board, the tentacle of the federal government tasked with setting prices and restricting competition among airlines. You probably know the subsequent chapter in the story - Southwest Airlines and several other discounters emerged on the national stage, and flying was forever democratized.
By 2002, a generation of deregulation had pressed down on prices. The standard wisdom is that in its 109-year history, the heavier-than-air flight industry has never been profitable as a whole. However, from our perspective as consumers, that's someone else's problem. Has the increase in passenger volume enabled prices to fall?
Prices were low in the 1990s, but they're still falling. In 2001, the average U.S. domestic flight ticket cost $391 (in 2011 dollars, as are all dollar figures in this article). Last year, that same ticket cost $364, which is 7% less, including taxes and levies.
Those numbers come from the Bureau of Transportation Statistics, whose methodology admittedly might be susceptible to bias. The prices cited are averages, calculated without respect to the ever-dynamic menu of available routes. Add a few more brief (and thus inexpensive) commuter flights to the total number of flights, and the average price should sink. That being said, there's no evidence that we're seeing fewer Guam - Los Angeles flights (America's longest domestic route), nor more flights like New England Airlines' famous 15-mile junket from Westerly, R.I. to neighboring Block Island.
And what about the eccentric uncle of long-distance transportation, the train? Amtrak is the United States' only certified passenger carrier. It's owned by the taxpayers, including the tens of millions of people who have never used it and never will. Heavily subsided since its inception in the early 1970s, Amtrak sets its fares well below fair market value. However, are those fares outpacing inflation, or vice versa?
At least one chain of logic would argue that Amtrak's passenger volume, and thus presumably its ticket prices, would move in response to the popularity of other forms of transportation. As economists would say, flight and train travel are substitute goods. In the months after 9/11, it was considered a given that traveling on Amtrak would become more attractive than before, at least relative to getting on a plane.
For one thing, trains don't get hijacked. However, Amtrak passengers also had, and have, less morbid and more commonplace reasons for staying earthbound - such as not having to get to the station hours before departure, nor submitting to searches and other restrictions on freedom.
So what's happened to Amtrak prices since 2002? According to a passenger travel log on Trainweb.com, that summer, an unreserved coach seat from San Diego to Fullerton, Calif. cost $40. If you had taken that same trip in December 2010, it would cost you $45, or 12% more.
Again, that's a short trip on a well-traveled route, in the cheapest way possible. What about a longer route in a higher seat class?
In August 1998, it cost $411 to send two adults and a child from Los Angeles to San Jose and back in a Superliner family bedroom - a room type that includes fresh towels and linens, toiletries, maid service and meals. Taking that same trip in that same room at the end of November would cost $937. It's a steep increase, but a justifiable one. If Amtrak is going to raise prices anywhere, it makes sense to do so on higher-margin (or in Amtrak's case, less-negative-margin) fares bought as something of an extravagance, rather than on the more common, high-volume fares in major urban corridors.
The Bottom Line
Either way, with regard to everyday transportation (whether behind the wheel, through the troposphere or via the iron horse), getting around today is inarguably less expensive than it was 10 years ago, and that's merely the most recent iteration of a long, downward trend on prices that shows no signs of stopping.
InvestingAfter a ten-year run, the economies of Latin America are in a decline. For sustainable, long-term growth, the region needs structural reforms.
EconomicsExamine the current state of the U.S. dollar as the world's reserve currency; learn the major reasons why the euro has failed to replace it in that capacity.
Investing BasicsMarkets are volatile and are in for more punishment. CDs can help investors earn some interest while they're waiting out the storm.
Mutual Funds & ETFsDiscover the top-rated mutual funds in the transportation industry, and understand how investors can position these funds in their asset allocation.
Chart AdvisorInvestors are keeping an eye on the transportation industry. We'll take a look at the trend direction and how to trade it.
BudgetingPlanning a trip to Tokyo? Here are a few ways that you can make the trip more affordable.
Personal FinanceDid you know you can rent an entire château, and that it might cost less than your New York pad?
EconomicsDiscover the current economic forces that are anticipated to significantly shift the landscape of the world's most powerful economies over the next decade.
InvestingCommodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
Mutual Funds & ETFsThese three transportation funds attract the majority of sector volume.
In Canada, new money comes from two places: the Bank of Canada (BOC) and chartered banks such as the Toronto Dominion Bank ... Read Full Answer >>
The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
Argentina is not a developed country. It has one of the strongest economies in South America or Central America and ranks ... Read Full Answer >>
Social Security benefits are adjusted for inflation. This adjustment is known as the cost of living adjustment (COLA). For ... Read Full Answer >>
In macroeconomics, balance of trade is one of the leading economic metrics that determines the trading relationship of a ... Read Full Answer >>
There is no question the composition of a country's balance of payments is more important than its balance of trade. This ... Read Full Answer >>