Table 1 provides a guideline for the estimated price
demand elasticity by level of aggregation and by
region. It multiplies the estimate for the relevant level of
aggregation by the relevant short-haul and geographic
elasticity multipliers.
Table 1: Estimated Price Elasticities of Passenger Demand
By way of illustration, elasticities for different situations
can be developed by selecting the relevant base price
elasticity and applying the relevant multipliers. For
example:
• To examine the impact of an EU-wide aviation tax on
short-haul markets, the elasticity would be developed
as follows:
- Base multiplier: -0.6 (supra-national)
- Geographic market: 1.4 (Intra Europe)
- Short-haul adjustor: 1.1
The price elasticity would then be calculated as:
-0.6 x 1.4 x 1.1 = -0.92
• To examine the impact of a UK tax on aviation
on Trans Atlantic traffic, the elasticity should be
developed as follows:
- Base multiplier: -0.8 (national)
- Geographic market: 1.2 (Trans Atlantic)
The price elasticity would then be calculated as:
-0.8 x 1.2 = -0.96
• To examine the impact of an increase in airport landing
fees on a particular short-haul route in Asia, the
elasticity should be developed as follows:
- Base multiplier: -1.4 (route)
- Geographic market: 0.95 (Intra Asia)
- Short-haul adjustor: 1.1
The price elasticity would then be calculated as:
-1.4 x 0.95 x 1.1 = -1.46