Key Types of Air
Travel Demand
Elasticities
The elasticity of air travel demand varies
according to the coverage and location of
the market in which prices are changed
and the importance of the air travel price
within the overall cost of travel. The
appropriate elasticity to use will change
according to the precise impact that is
being analysed.
The previous chapter provided definitions for the different types of demand elasticity.
Yet, when using this methodology to estimate the demand elasticity of air travel it is
important to be clear about the precise question that is being asked. What is the price
that is being charged (e.g. an individual airline ticket price or prices within the market
as a whole)? What is the unit of demand that is being assessed (e.g. demand for an
individual airline or demand for total air travel)? Estimating an appropriate demand
elasticity requires a clear definition of what is being studied.