In each of the five levels of aggregation, different
cross-price elasticities exist, reflecting the availability of
substitute options. The own price elasticity at one level of
aggregation can reflect both the own price and cross price
elasticities at other levels of aggregation. The interaction
between these effects adds significant complexity to the
analysis, requiring clarity on which own price and cross
01 - Air Travel Demand 5
price elasticities were measured and controlled for. For
example, an analysis of route-level elasticities which does
not control for route substitution effects may be more
appropriate for a national-level elasticity.
The evidence and discussion provided in this report
focuses on the appropriate elasticities for the route,
national and supra-national level of aggregation.