"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.

Related Articles
  1. Investing Basics

    Why Interest Rates Affect Everyone

    Learn why interest rates are one of the most important economic variables and how every individual and business is affected by rate changes.
  2. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  3. Investing

    10 Cheap Vacations for the Ultimate Foodie

    If you are a foodie then explore one of these destinations in 2016.
  4. Economics

    Understanding Donald Trump's Stance on China

    Find out why China bothers Donald Trump so much, and why the 2016 Republican presidential candidate argues for a return to protectionist trade policies.
  5. Personal Finance

    5 Airlines That Offer Refundable Plane Tickets

    Compare prices for non-refundable and refundable airline fares for five of the United States' most popular airlines, and learn about varying cancellation fees.
  6. Stock Analysis

    Does TripAdvisor Offer Upside Potential? (TRIP)

    Will TripAdvisor's downside risk outweigh upside potential in 2016? It's most recent SEC filing offers some strong clues.
  7. Savings

    Avoid the Worst Air/Rail Travel Fee Rip-Offs

    Airline fees can vary tremendously. We've compared them side-by-side – along with Amtrak's new charges – to determine who charges the most (and least).
  8. Markets

    What Slow Global Growth Means for Portfolios

    While U.S. growth remains relatively resilient, global growth continues to slip.
  9. Markets

    Can Deflation Be Good?

    General economic theory consensus rules that deflation is bad for the economy. But the Swiss economy, which is growing despite a drop in prices for the last four years, is proving otherwise. ...
  10. Home & Auto

    Make This The Year You Get Vacation Insurance

    With a few simple policy additions you can protect your holiday plans from being ruined.
  1. How do you make working capital adjustments in transfer pricing?

    Transfer pricing refers to prices that a multinational company or group charges a second party operating in a different tax ... Read Full Answer >>
  2. Are Canadian Pension Plans inflation-protected?

    The Canada Pension Plan protects pension holdings against inflation and adjusts its annual rates for inflation. The Canada ... Read Full Answer >>
  3. When is the best time to invest in inflation-protected securities?

    Investment timing decisions are among the most challenging faced by investors as they have a significant impact on ultimate ... Read Full Answer >>
  4. Should I include inflation-protected securities in my 401(k)?

    One of the most significant challenges faced by 401(k) account owners is the creation of an investment plan that can withstand ... Read Full Answer >>
  5. Is Social Security inflation-protected?

    Social Security benefits are inflation-protected. Social Security was created in 1935, and taxes were collected for the first ... Read Full Answer >>
  6. Marginal propensity to Consume (MPC) Vs. Save (MPS)

    Historically, because people in the United States have shown a higher propensity to consume, this is likely the more important ... Read Full Answer >>

You May Also Like

Trading Center