Chapter 4: Economic Characteristics of Passenger Travel and Tourism
Economic Trends
In 2014 transportation contributed 9.6 percent, or $1.66 trillion, to the Nation’s gross domestic product (GDP). 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 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.
Figure 4-1 Percent of GDP by Spending Category: 1991–2014
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’s 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 passenger VMT (between 2007 and 2008). After 2009 the economy began a period of slow recovery, with passenger VMT remaining relatively unchanged until 2011. Since 2012 both the economy and highway passenger travel grew, showing the largest year-over-year increases in both GDP and passenger VMT since the recession that began in 2007 (GDP grew 2.4 percent and VMT grew 1.2 percent between 2013 and 2014).
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 passenger and freight movement. Since 2000 both the passenger TSI and total TSI have shown greater volumes of both goods and people movement throughout the Nation. Transportation activities dropped following 9-11 and during the most recent recession, with passenger travel falling more than total transportation after 9-11. However, during the most recent recession the passenger TSI fell less than the total TSI, which suggests passenger travel was less sensitive to the economic downturn than freight transportation. Both indexes grew during the sluggish period of economic growth to follow, with the passenger TSI reaching an all-time high in July 2015. By December 2015 the passenger TSI had risen 14.5 percent from its low point during the recession, showing an increase in demand for the for-hire passenger transportation sector.
Figure 4-3 Passenger Transportation Services Index: January 2000–December 2015
Spending on Transportation
In 2014 there were about 125 million households in the United States,1 with the average household spending a larger share of its expenditures on transportation than in previous years (16.0 percent in 2010 and 17.0 percent in 2014). In 2014 the average American household spent about $9,073 on transportation, accounting for about 17.0 percent of their total household expenditures. The highest transportation cost for households was to own and operate private vehicles, including about $3,301 on vehicle purchases, $2,468 for gasoline and motor oil, and $2,723 for other vehicle expenses, such as insurance, maintenance, and repairs. The average household only spent about 1.1 percent of their expenses on public transportation.
Figure 4-4 Average Household Expenditures by Spending Category: 2014
The two past decades have generally seen steady increases in transportation prices, especially those related to travel by private automobiles. However, starting in 2014 the decline in fuel prices contributed to the decrease in the overall cost of transportation for consumers and businesses. In 2014 and 2015, gasoline and diesel prices dropped to levels not seen since 2005, after briefly falling to that level in January 2009 during the trough of the last recession. Between the price peak in 2014 and the trough in 2016, gasoline and diesel prices dropped by about 50 percent.
Figure 4-5 Gasoline and Diesel Retail Prices: January 1995–February 2016
Recent trends show a 7.8 percent drop in transportation prices between 2014 and 2015, while the overall prices for consumer goods and services increased 0.1 percent. Motor fuels led the decline this year in transportation prices, dropping 27.1 percent. The price of used cars and trucks (-1.3 percent) and motor vehicle parts and equipment (-0.4 percent) also went down. Overall, public transportation, which is defined as fares for mass transit, buses, trains, airlines, taxis, school buses for which a fee is charged, and fare for boats declined during this time period, with fares for airlines and intercity train dropping 5.0 and 1.0 percent, respectively. However, prices in other areas of transportation increased, with motor vehicle insurance, parking fees and tolls, maintenance and repair, vehicle fees, intracity mass transit (local mass transit), and ship fare becoming more expensive.
Figure 4-6 Percent Change in Consumer Prices: 2014–2015
Costs of Transportation
Accounting for inflation, the average cost to own and operate an automobile has increased between 1990 and 2004 while declining over the past decade. 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 $8,799 per year in 1990, $10,420 in 2000, and $8,817 in 2013, after adjusting for inflation. Due to a drop in gasoline prices, the average cost of owning and operating an automobile dropped to $8,698 per year in 2014.
Figure 4-7 Average Total Cost of Owning and Operating an Automobile: 1990–2014
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, airfare has decreased when accounting for inflation. Fares include only the price paid at the time of the ticket purchase and do not include fees for optional services, such as baggage fees. During the fourth quarter 2015, the average airfare of a domestic flight was $363. In current dollars, this fare is up $22 (66 percent) from fourth quarter 2000 but down approximately $100 (-21.6 percent) when accounting for inflation.
Figure 4-8 Average Airfare for Domestic Flights: 2000 Q1–2015 Q4
Since 2000 airlines have been transporting more passengers per mile, increasing load factor by 19.2 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 over the last decade, 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. In 2000 airfare accounted for 88.9 percent of the total revenue, compared to 74.7 percent in 2015.
Figure 4-9 Load Factor and Average Airfare: 2000–2015
Economic Contribution and Output of Passenger and Tourism Travel
Satellite accounts provide a means for measuring the contribution and output of transportation to the economy. The Transportation Satellite Accounts (TSAs) show the contribution of transportation carried out by for-hire transportation firms (e.g., trucks, 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.
Box 4-A Transportation Satellite Accounts: 2012
In 2014 transportation goods and services accounted for 8.9 percent, or $1.4 trillion, of U.S. gross domestic product. The TSAs show the importance of transportation to the national economy by mode. For-hire transportation contributed 2.9 percent to the national economy in 2012, while business-related in-house transportation contributed an additional 1.2 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.
Figure 4-10 GDP Attributed to Transportation Mode: 2012
Between 2013 and 2014, real spending (output) on transportation-related tourism goods and services increased by 1.6 percent, to $310.9 billion, reflecting growth in tourism travel. In 2014 passengers spent $122.3 billion on air travel and $65.9 billion on gasoline purchases. Categories with the largest percent growth between 2013 and 2014 were travel arrangement and reservation services (9.9 percent), intercity charter bus services (8.7 percent), and passenger water transportation services (7.7 percent).
Table 4-1 Real Output by Transportation Related Tourism Services and Commodities: 2013 and 2014
Employment and Occupations in Passenger Travel
In 2014 the entire transportation-related labor force employed 13.1 million people, occupying about 9.4 percent of the labor force in the national economy. In the for-hire transportation sector, which provides transportation services for a fee, transit and ground passenger transportation employs the largest number of employees, occupying about 467,000 jobs in 2014. Air passenger transportation employed the second largest number of jobs (444,000) followed by rail transportation (236,000). Employment in nearly all for-hire transportation industries increased between 2000 and 2014, except air transportation, which dropped by 27.7 percent, attributing to the 5.8 percent overall decline in the transportation-related labor force.
Various occupations support the movement of people. In 2014 the largest occupations by total employment in passenger transportation sector were school or special client bus drivers (499,440), taxi drivers and chauffeurs (178,260), and transit and intercity bus drivers (158,050). However, although occupying a large number of jobs, many of these workers make a relatively low annual 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 2014 airplane pilots and flight engineers made the highest salaries, bringing in a median wage of $118,140 per year.
Figure 4-11 Employment and Wages for Select Occupations in Passenger Travel: 2014
1 Current Population Survey, CPS 2015 Annual Social and Economic Supplement, http://www.census.gov/programs-surveys/cps/data-detail.html, as of February 2016.