A HEDONIC PRICE INDEX FOR AIRLINE TRAVEL

Our research takes an exhaustive approach to measurement issues in price index construction for the BLS airfare index. We pursue a number of the objectives for dealing with the biases that the 1997 CPI Commission recommended and detail a protocol for data collection and analysis that can be replicated and can be enhanced by availability of additional data sources. We find an upward bias in the BLS airfare index over the period considered. However, because of issues of practicality and implementability of the methods we utilize in our analysis, the goals of the Commission recommendations remain illusive and problematic in being more broadly applied to other components of the CPI.