Executive Summary
The demand for air travel is sensitive to changes in air travel prices and incomes.
However, the degree of sensitivity (i.e. its demand elasticity) will vary according to different situations. To ensure that air transport policies are effective, reliable estimates for demand elasticities are essential.
This report provides important new evidence on the size and appropriate use for demand elasticities applicable to a wide range of air transport markets.
it builds upon previous academic research to provide new estimates of air travel demand elasticities in different locations and scenarios, based on a comprehensive econometric analysis usingkey air travel databases.
The aim of the tudy is to provide robust air travel demand easticity estimates to ensure that policy decisions related to issues such as liberalisation, airport charges, taxation, emissions schemes,are made on the basis of appropriate and reliable evidence. it provides important new estimates to ensure that price elasticity estimates do not underplay the sensitivity of passengers to price and are used correctly.
DEFINITION OF DEMAND ELASTICITIES
Demand elasticities measure the hange in the quantity demanded of a particular good or service as a result of changes to other economic variables, such as its own price, the price of competing or complementary goods and services, income levels and taxes. They provide a key insight into the proportional impact of different economic actions and policy decisions.
This report estimates the demand elasticity of air travel under various scenarios and locations. it focuses on three main types of demand elasticity.
Executive SummaryThe demand for air travel is sensitive to changes in air travel prices and incomes.However, the degree of sensitivity (i.e. its demand elasticity) will vary according to different situations. To ensure that air transport policies are effective, reliable estimates for demand elasticities are essential.This report provides important new evidence on the size and appropriate use for demand elasticities applicable to a wide range of air transport markets.it builds upon previous academic research to provide new estimates of air travel demand elasticities in different locations and scenarios, based on a comprehensive econometric analysis usingkey air travel databases.The aim of the tudy is to provide robust air travel demand easticity estimates to ensure that policy decisions related to issues such as liberalisation, airport charges, taxation, emissions schemes,are made on the basis of appropriate and reliable evidence. it provides important new estimates to ensure that price elasticity estimates do not underplay the sensitivity of passengers to price and are used correctly.DEFINITION OF DEMAND ELASTICITIESDemand elasticities measure the hange in the quantity demanded of a particular good or service as a result of changes to other economic variables, such as its own price, the price of competing or complementary goods and services, income levels and taxes. They provide a key insight into the proportional impact of different economic actions and policy decisions.This report estimates the demand elasticity of air travel under various scenarios and locations. it focuses on three main types of demand elasticity.
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