There appears to be an inconsistency between the
size of price elasticities estimated for the air transport
industry and those estimated for the overall travel and
tourism industry. But there are two main explanations
for this. Firstly, as the air travel component of the
journey can be relatively easily substituted between
airlines, routes, modes, etc, the price elasticity for the
air travel price can be much higher than suggested by
the price elasticity of the overall journey cost. Secondly,
passengers (especially for short leisure journeys) can
use a “two-stage” decision-making process, selecting a
flight destination based on the level of air travel price
offered and then considering the other costs associated
with the journey.
typical journey.