Nevertheless, the previous studies do show a number of
consistent themes. All of the studies reviewed found that
there was a significant demand response to changes in
air travel prices. This indicates that any policy action that
results in higher air travel prices (e.g. passenger taxes,
increased landing fees) will result in a decline in demand.
Critically, however, the extent of that decline will depend
on a number of factors:
Business vs. Leisure Passengers. In general, all else •
being equal, business travellers are less sensitive to
price changes (less elastic) than leisure travellers.
Business travellers generally have less flexibility to
postpone or cancel their travel than leisure travellers.
Short-Haul vs. Long-Haul Travel. Price elasticities on •
short-haul routes were generally higher than on long-
haul routes. In part, this reflects the opportunity for
inter-modal substitution on short-haul routes.
Nevertheless, the previous studies do show a number of consistent themes. All of the studies reviewed found that there was a significant demand response to changes in air travel prices. This indicates that any policy action that results in higher air travel prices (e.g. passenger taxes, increased landing fees) will result in a decline in demand. Critically, however, the extent of that decline will depend on a number of factors:Business vs. Leisure Passengers. In general, all else • being equal, business travellers are less sensitive to price changes (less elastic) than leisure travellers. Business travellers generally have less flexibility to postpone or cancel their travel than leisure travellers.Short-Haul vs. Long-Haul Travel. Price elasticities on • short-haul routes were generally higher than on long-haul routes. In part, this reflects the opportunity for inter-modal substitution on short-haul routes.
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