InterVISTAS Consulting reviewed the available literature on demand elasticities. The review of previous studies helps to provide a greater understanding of air travel price elasticities and provides important insights for the new econometric analysis. The different studies produced a wide range of air travel price elasticity estimates, varying in accordance with the markets analysed, the time period assessed, the methodology used and the available data. Even within some particular studies, a range of elasticities are estimated for different markets.
Nevertheless, the previous studies do show a number of consistent themes. All of the studies reviewed found that there was a significant demand response to changes in air travel prices. This indicates that any policy action that results in higher air travel prices (e.g. passenger taxes, increased landing fees) will result in a decline in demand. Critically, however, the extent of that decline will depend on a number of factors:
• Business vs. Leisure Passengers. In general, all else being equal, business travellers are less sensitive to price changes (less elastic) than leisure travellers. Business travellers generally have less flexibility to postpone or cancel their travel than leisure travellers.
• Short-Haul vs. Long-Haul Travel. Price elasticities on short-haul routes were generally higher than on long- haul 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)
InterVISTAS Consulting reviewed the available literature on demand elasticities. The review of previous studies helps to provide a greater understanding of air travel price elasticities and provides important insights for the new econometric analysis. The different studies produced a wide range of air travel price elasticity estimates, varying in accordance with the markets analysed, the time period assessed, the methodology used and the available data. Even within some particular studies, a range of elasticities are estimated for different markets.Nevertheless, the previous studies do show a number of consistent themes. All of the studies reviewed found that there was a significant demand response to changes in air travel prices. This indicates that any policy action that results in higher air travel prices (e.g. passenger taxes, increased landing fees) will result in a decline in demand. Critically, however, the extent of that decline will depend on a number of factors:• Business vs. Leisure Passengers. In general, all else being equal, business travellers are less sensitive to price changes (less elastic) than leisure travellers. Business travellers generally have less flexibility to postpone or cancel their travel than leisure travellers.• Short-Haul vs. Long-Haul Travel. Price elasticities on short-haul routes were generally higher than on long- haul routes. In part, this reflects the opportunity for inter-modal substitution on short-haul routes.•สายการบินเทียบกับตลาดเทียบกับชาติ Elasticities บางการศึกษาที่สนับสนุนแนวคิดที่ความยืดหยุ่นของอุปสงค์ที่ประสบ โดยแต่ละสายการบินมากกว่าที่กับตลาดทั้งหมด•รายได้ Elasticities รวมรายได้ที่เป็นตัวแปรที่อธิบายความแยกผลของกะตามเส้นอุปสงค์ (เกิดจากการเปลี่ยนแปลงในราคาเดินทางอากาศ) จากผลของการเปลี่ยนแปลงของเส้นอุปสงค์ทั้งหมดที่ (เกิดจากการเปลี่ยนแปลงในรายได้หรือ GDP)
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