ECONOMETRIC RESULTS
The new econometric analysis is comprehensive, based
on over 500 regression models. Building on the previous
studies, the new econometric analysis develops a set of
in-depth guidelines, and guideline elasticities, that can
be applied to the analysis of different air markets. Base
elasticity estimates are developed for the different levels
of aggregation (route, national and supra-national level).
Multiplicative estimates were then developed to adjust
the elasticities to reflect specific geographical markets.
i) Level of Aggregation
In summary, the econometric results found that at the
route level (where competition between airlines or citypair
markets is high) the sensitivity of demand to price
is very high. However, at the national or regional level,
air travel is relatively price insensitive. The results support
demand elasticities of: