The studies including the income term all produced
positive income elasticities, with air travel increasing at
a higher rate than income growth.l
routes. In part, this reflects the opportunity for
inter-modal substitution on short-haul routes.
• Airline vs. Market vs. National Elasticities. Some of
the studies supported the concept that the demand
elasticity faced by an individual airline is higher than
that faced by the whole market.
• Income Elasticities. Including income as an explanatory
variable of demand isolates the effects of a shift along
the demand curve (caused by a change in air travel
price) from the effect of a shift of the whole demand
curve (caused by a change in incomes or GDP)