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Elasticities of demand for leisure air travel: A system modelling approach

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  • Njegovan, Nenad

Abstract

In this study, the UK outbound demand for leisure air travel has been examined using a demand system which takes into account the ways in which the expenditure on air fares interacts with both the expenditure on non-fare components of travel abroad and with expenditure on domestic leisure. The findings suggest that there is a strong link between total consumer expenditure and expenditure on air travel with the expenditure elasticity greater than one but that, considered in aggregate, the demand for air travel is moderately inelastic with respect to air fares alone. However, the findings also show that interactions between air travel expenditure, other costs of travel abroad, as well as expenditure on leisure activities in the UK, involve sizeable cross-price elasticities.

Suggested Citation

  • Njegovan, Nenad, 2006. "Elasticities of demand for leisure air travel: A system modelling approach," Journal of Air Transport Management, Elsevier, vol. 12(1), pages 33-39.
  • Handle: RePEc:eee:jaitra:v:12:y:2006:i:1:p:33-39
    DOI: 10.1016/j.jairtraman.2005.09.003
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    References listed on IDEAS

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    2. Profillidis, V. & Botzoris, G., 2015. "Air passenger transport and economic activity," Journal of Air Transport Management, Elsevier, vol. 49(C), pages 23-27.
    3. Pentelow, Laurel & Scott, Daniel J., 2011. "Aviation’s inclusion in international climate policy regimes: Implications for the Caribbean tourism industry," Journal of Air Transport Management, Elsevier, vol. 17(3), pages 199-205.
    4. Lei, Zheng & Papatheodorou, Andreas, 2010. "Measuring the effect of low-cost carriers on regional airports' commercial revenue," Research in Transportation Economics, Elsevier, vol. 26(1), pages 37-43.
    5. Karen Mayor & Richard S. J. Tol, 2008. "Aviation and the Environment in the Context of the EU-US Open Skies Agreement," Papers WP240, Economic and Social Research Institute (ESRI).
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    8. Karen Mayor & Richard S.J. Tol, 2007. "The Impact Of The Eu-Us Open Skies Agreement On International Travel And Carbon Dioxide Emissions," Working Papers FNU-134, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2007.
    9. Mayor, Karen & Tol, Richard S.J., 2009. "Aviation and the environment in the context of the EU–US Open Skies agreement," Journal of Air Transport Management, Elsevier, vol. 15(2), pages 90-95.
    10. Niamh Callaghan & Richard S. J. Tol, 2013. "UK Tourists, the Great Recession and Irish Tourism Policy," The Economic and Social Review, Economic and Social Studies, vol. 44(1), pages 103-116.
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    12. Howitt, Oliver J.A. & Revol, Vincent G.N. & Smith, Inga J. & Rodger, Craig J., 2010. "Carbon emissions from international cruise ship passengers' travel to and from New Zealand," Energy Policy, Elsevier, vol. 38(5), pages 2552-2560, May.
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    15. Seetaram, Neelu, 2010. "Computing airfare elasticities or opening Pandora's box," Research in Transportation Economics, Elsevier, vol. 26(1), pages 27-36.
    16. Fu, Xiaowen & Lei, Zheng & Wang, Kun & Yan, Jia, 2015. "Low cost carrier competition and route entry in an emerging but regulated aviation market – The case of China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 3-16.
    17. Zietsman, Davina & Vanderschuren, Marianne, 2014. "Analytic Hierarchy Process assessment for potential multi-airport systems – The case of Cape Town," Journal of Air Transport Management, Elsevier, vol. 36(C), pages 41-49.
    18. Escobari, Diego, 2017. "Airport, airline and departure time choice and substitution patterns: An empirical analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 103(C), pages 198-210.
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