Economic Trends in Passenger Travel

In 2013 transportation overall contributed to 9.5 percent of the Nation’s gross domestic product (GDP), amounting to nearly $1.6 trillion spent on transportation annually. Over the last two decades, the share of spending on transportation goods and services has remained relatively stable at about 9 to 10 percent of GDP. However, during the economic downturn in 2009, expenditures on transportation dropped to below 9 percent of total GDP. Not only was there less spending and economic activity overall during this time period, but the share of total GDP spending increased for necessities, such as food and healthcare, while decreasing for transportation and nonessential goods and services. As the economy gradually improved after 2010, spending on transportation both as an amount of GDP and a share of GDP increased, showing that transportation is growing.

Use of the Nation’s highways has generally grown over time but not as quickly as the economy as a whole. Overall, highway passenger vehicle-miles traveled (VMT) have steadily increased since 1990 before dropping during the recent economic recession. Between 1990 and the economy peak of 2006, GDP and passenger VMT grew an average of 3.9 and 2.9 percent per year, respectively. When the economy slowed in 2007, discretionary travel on highways diminished, contributing to a 1.8 percent drop in VMT (between 2007 and 2008). After 2009 the economy began a period of slow recovery, with VMT remaining relatively unchanged. In 2012 and 2013 VMT began to increase slightly but at a slower rate than GDP, showing economic growth was outpacing the growth of travel on the Nation’s highways at a greater rate than prior to the recession.

Passenger travel by air, rail, and transit has grown over the past 15 years. One way to measure this is the passenger Transportation Service Index (TSI). The passenger TSI measures the movement of passengers, while the total TSI measures both passengers and freight. Since 2000 both the passenger TSI and total TSI show greater volumes of both goods and people throughout the Nation. The volume of transportation activity dropped during the most recent recession; however, the passenger TSI fell less than the total TSI, suggesting that passenger travel was less sensitive to the economic downturn than overall transportation services. Both indexes grew during the sluggish period of economic growth to follow, with the passenger TSI reaching an all-time high at the end of 2014. By December 2014 the passenger TSI had risen 12.3 percent from its low point during the recession, showing an increase in demand for the for-hire passenger transportation sector.

Spending on Passenger Travel

In 2013 there were over 122 million households in the United States, with many spending a larger share of their expenditures on transportation than in previous years (16.0 percent in 2010 and 17.6 percent in 2013). In 2013 the average American household spent about $9,004 on transportation, accounting for about 17.6 percent of their total household expenditures. The highest transportation cost for households was to own and operate private vehicles, including about $3,270 on vehicle purchases, $2,610 for gasoline and motor oil, and $2,580 for other expenses. The average household only spent about 1.1% of their expenses on public transportation.

The past decade has generally seen steady increases in transportation prices, especially those related to travel by private automobiles. However, in 2014 a major dynamic impacted passenger travel and transportation as a whole. That year gasoline and diesel prices dropped to levels not seen since before 2005 and again, briefly, during the trough of the last recession in January 2009. This recent drop in gasoline and fuel prices contributed to a decrease in the overall cost of transportation for consumers.

Recent trends show a 0.7 percent drop in transportation prices between 2013 and 2014, while the overall prices for goods and services increased 1.6 percent. Motor fuels led the decline in transportation prices, dropping 3.8 percent. The price of motor vehicle parts and equipment (-1.1 percent) and used cars and trucks (-0.5 percent) also went down. Overall, public transportation (including fares for mass transit, buses, trains, airlines, taxis, school buses for which a fee is charged, and boats) prices also declined during this time period, with fares for airlines (-1.6 percent), intercity train (-2.3 percent), and ship (-0.7 percent) decreasing. However, prices in other areas of transportation increased, with motor vehicle insurance, parking fees and tolls, maintenance and repair, and intracity mass transit (local mass transit) becoming more expensive.

Costs of Passenger Travel

The average cost to own and operate an automobile has increased slightly over the past two decades. Assuming the average vehicle is driven 15,000 miles per year, the cost of ownership (insurance, license, registration, taxes, depreciation, and finance charges) and operation (fuel, maintenance, and tires) was about $8,860 per year in 1990, $10,500 in 2000, and $9,100 in 2012 (in inflation-adjusted 2013 dollars). Due to the recent drop in gasoline prices and other automobile-related prices, the average cost of owning and operating an automobile dropped to $8,900 per year in 2013.

The average airfare has fluctuated over time. Although prices appear to have increased slightly since 2000 in terms of what comes out of one’s wallet, accounting for inflation, airfare has actually decreased. At the end of 2014, the average airfare of a domestic flight was about $393. In current dollars, this is up $52 from the beginning of 2000 but down approximately $74 when accounting for inflation. Over the past year, airfare has increased 2.8 percent in current terms and 2.0 percent if adjusting for inflation.

Since 2000 airlines have been transporting more passengers per mile, increasing load factors by about 17 percent. In economic terms, air carriers are becoming more efficient, fitting more and more passengers on each plane. At the same time, faced with rising fuel prices and other costs, airlines sought new sources of revenue in recent years, including fees on service such as baggage and reservation changes, which led to a reduction in fare revenues as a share of total scheduled passenger airline revenue.

Economic Contribution and Output of Passenger and Tourism Travel

Satellite accounts provide a means for measuring the contribution and output of passenger and tourism travel to the economy. The Transportation Satellite Accounts (TSAs) show the contribution of transportation carried out by for-hire transportation firms (e.g., air carriers, railroads, and transit agencies), nontransportation industries for their own purposes (known as business-related in-house transportation), and by households through the use of a vehicle. The Travel and Tourism Satellite Accounts (TTSAs) provide a detailed picture of travel and tourism activity and its role in the U.S. economy.

The TSAs show the importance of transportation to the national economy. For-hire transportation contributed about 3 percent to the national economy in 2012, while business-related in-house transportation contributed an additional 1 percent. Households contributed $295.6 billion (or an additional 1.8 percent) to the national economy through the use of private vehicles.  For-hire and in-house transportation includes both freight and passenger data because the individual contributions of for-hire and in-house passenger transportation are not available.

Between 2010 and 2013 the value of transportation-related tourism goods and services increased by 14.2 percent to $310.1 billion, reflecting growth in tourism travel. In 2013 passengers spent $124 billion on air travel and $65 billion on gasoline purchases. Categories with the largest percent growth between 2010 and 2013 were gasoline (26 percent), passenger water transportation services (24 percent), and automotive rental and leasing (24 percent).

Employment and Occupations in Passenger Travel

In 2013 the entire transportation-related labor force employed 12.8 million people, occupying about 9.4 percent of the labor force in the national economy. In the for-hire transportation sector, which measures businesses that participate in transportation travel for a fee, air travel employs the largest number of employees in passenger travel, occupying about 449,000 jobs in 2013. Transit and ground passenger transportation employed the second largest number of jobs (445,800), with 185,500 jobs in school and employee buses third. Employment in nearly all for-hire transportation industries increased between 2000 and 2013, except air transportation, which dropped by 27 percent.

Various occupations support the movement of people. In 2013 the largest occupations by total employment in passenger transportation were school or special client bus drivers (496,100), taxi drivers and chauffeurs (170,000), and transit and intercity bus drivers (157,800). However, although occupying a large number of jobs, many of these workers also make a relatively low wage. Additionally, many of these occupations, such as taxi drivers and parking lot attendants, may work part-time or in more than one job, skewing their actual salary from what is shown in the data. In 2013 airplane pilots and flight engineers made the highest salaries, bringing in an average of $129,600 per year.