This report discusses the key findings from extensive
research undertaken on behalf of IATA by InterVISTAS
Consulting Inc. to estimate air travel demand elasticities
applicable to a wide range of air transport markets.
It provides important new evidence for estimating
elasticities in different locations and scenarios, based on
access to comprehensive air travel databases. It builds
upon previous academic research into air travel demand
elasticities.
The report is structured as follows:
What are Demand Elasticities?
Chapter 3 provides definitions for different categories
of demand elasticities and discusses how each can
be interpreted. It outlines three key concepts: price
elasticity of demand, cross-price elasticity of demand
and income elasticity of demand. It also discusses key
factors that influence both the demand for air transport
and the sensitivity of this demand to changes in prices
and incomes.
How can this be applied to air travel demand?
Chapter 4 discusses the different types of demand
elasticity that can be estimated for air travel. It discusses
how the relevant demand elasticity can change in relation
to the market size and its geographical location.
Previous estimates
Chapter 5 summarises the key findings from the review
undertaken by InterVISTAS Consulting Inc. of previous
academic studies that have estimated air travel demand
elasticities. It outlines the wide range of estimates that
have been produced, as well as the common themes
between the majority of the studies.
New evidence for air travel demand elasticities
Chapter 6 outlines the key findings from a comprehensive
econometric analysis of the data from three key air travel
data sources. The results from this analysis provide
important new evidence of the relevant demand elasticity
in different markets.
What does this mean for air transport policymakers?
Chapter 7 discusses how this new evidence can be applied
to air transport policy decisions. It provides guidelines
for the application of air travel demand elasticities for
different types of decisions. It helps to ensure that policy
decisions are made on the basis of appropriate and
reliable estimates of their impact on demand.
Chapter 8 provides a summary and conclusions.