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: