Elasticity Of Travel Trends In The Air Travel Industry
A good analysis and understanding of the travel features and trends of the passengers is very important to build up a successful business model for airlines. In the following, we will try to discuss this topic from the aspects of elasticity of passenger demand, popular destinations, mode of transport and the booking patterns.
1. Elasticity of Passenger Demand
At the present time, the competition in the air travel industry is becoming more and more intense. The passenger is more price sensitive in the worldwide. With this background, business development based on an elasticity of demand is more crucial to the business success for every airlines.
But, an accurate elasticity of demand is very difficult because it depends …show more content…
So, here we will focus on the price elasticity of demand and income elasticity of demand mainly.
At the same time, the responsiveness of demand varies from one market to another because of the influence of lots of factors mentioned above. So, in this report three distinct market categories will be considered for both kinds of elasticities of passenger demand, which are different areas, different market levels (Route/market level, national level and supra-national level) and different travel distances (long haul or short haul).
First, let us have a look at the price elasticity of demand in the air travel industry. To examine the sensitivity of the demand for air travel to its price, separate estimates of the price elasticity of demand are gathered for each of these distinct markets. Table1 is the estimated price elasticity of demand from IATA. Route/Market level National level Supra-national level Short haul Long haul Short haul Long haul Short haul Long …show more content…
Domestic flight is the air travel within only one country while international flight is the air travel among at least two different countries.
By the number of transit in the air travel, it also can be divided into two types: non-stop or direct flight and connection flight.
Air travel is a more and more popular mode of transportation with the progress of the economy in the world. It is overwhelmingly dominant in transcontinental and intercontinental travel and is becoming more competitive for shorter trips in many regional markets.
In the US, for instance, air travel is the most important mode for trips more than about 1,100 kilometers. In developing countries low cost carriers are proliferating as well, bringing air fares lower and attracting more passengers, particularly because of the poor quality of land transportation. Therefore, the world's busiest air routes are not long haul flights, but short range flights between cities less than 1,000 km apart. Figure 2. Unit cost and the price of air transport, adjusted for inflation