Elasticity of Air Travel Demand

Paper Summary:

The paper attempts to identify the economic and industry specific aspects of varying elasticities of demand for air travel in the United States. The paper explores the consumer's demand in accordance with the recent price increase trends in air travel. The paper then proposes a research study to better measure demand for air travel in the U.S. airline industry.

Outline:
Summary and Introduction
Air Travel Demand Elasticity Ratios
Literature Review
Methods for Measuring Demand for Air Travel in the U.S.

From the Paper:

"The concept of elasticity involves the considerations for the occurring trends with consumer demand for a product, good or service that is increasing in price (Moffatt, 2005). As history has shown, when the price of a good or service climbs, the consumers resulting demand will decrease.
"Often, the consumer may begin purchasing less, taking advantage of similar goods or services of a competitor or withdraw entirely from the good or service that is increasing in price. To the degree to which demand decreases while product or service prices climb, the higher the price elasticity of demand. The price elasticity of demand is used to measure the exact economic scale of the correlation between the variances in the degree of demand for a good or service and the changes to their price."

Sample of Sources Used:

• Moffatt, Mike. (2005). Price Elasticity of Demand. Journal of Commerce. 45-59, v. 16. 5th edt.
• Kent, Jr., Richard J. (1980) Safe, Separated, and Soaring: A History of Federal Civil Aviation Policy, 1961-1972. Department of Transportation/Federal Aviation Administration.
• T. E. Keeler. (1972). Airline Regulation and Market Performance. Bell Journal of Economics and Management Science. Pp. 399-424.
• J.M. Jung, E.T. Fuji. (1976). The Price Elasticity of Demand for Air Travel. Vol. 10, No. 3, pp. 257.
• The Canadian Department of Finance. (2007): http://www.fin.gc.ca/consultresp/Airtravel/airtravStdy_2e.html#4.

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