Policy Implications
The correct elasticity value to use in analysing an air
transport policy decision depends on the type of question
being asked. The impact on demand of higher travel
costs on a given route due to a rise in airport landing
charges requires a different (higher) elasticity than when
examining the traffic impact of a wider travel cost increase
due to a passenger tax on all routes in a country.
Air transport policy decisions run the risk of being
ineffective, or even counter-productive, if the correct
demand elasticity is not used. For example