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At the route or market level (e.g. London Heathrow–Paris CDG or London-Paris), the elasticity response is expected to be lower than at the price class or carrier level. Travellers faced with a travel price increase on all carriers serving a route (e.g. due to an increase in airport fees and charges), have fewer options for substitution. However, they can still choose to travel on an alternative route, while also (in some cases) having the option to use another mode of travel or simply choose to not travel.
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At the national level, travel price elasticities are expected to be lower, as travellers have fewer options for avoiding the price increase. For example, if a national government imposed a new or increased tax on aviation, travellers could only avoid
this increase by travelling elsewhere, using another
mode (which may not always be possible), or choosing
not to travel. For example, if the UK government
imposed an increased tax on aviation departures, UK
residents travelling to mainland Europe could respond
by travelling by Eurostar or by ferry, or choose not to
travel. Similarly, travellers in France could respond by
travelling to the UK by another mode or by switching
their destination to another country, such as Germany
or Spain.
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This represents a change in
prices that occurs at a regional level across several
countries. For example, an aviation tax imposed on
all member states of the European Union. In this
case, the elasticity is expected to be even lower, as
the options for avoiding the price increase are even
further reduced.