Substitute
Goods.
•
The inclusion of a substitute travel
price variable was tested on a subset of routes and
was found to increase price elasticities. Estimates
that exclude a meaningful substitute in the regression
model will produce more inelastic estimates than
a correctly specified model would produce. Route
substitutes can be defined as a different airport
serving the same catchment area (e.g. Chicago-
O’Hare or Chicago-Midway) or a different destination
serving the same purpose (e.g. Las Vegas or Reno).