This paper develops a new set of European air travel demand elasticities with data from the International Civil Aviation Organization; a new database was constructed in the context of examining the role for dynamic demand management in reducing aviation carbon dioxide (CO2) emissions. The results indicate that air travel demand appears to be fairly price inelastic, with a fare elasticity of 20.29% in the short run and 20.44% in the long run. As a result, demand management strategies focused solely on increasing air fares may do little to curb demand growth. In contrast, supply restrictions in the form of reduced service frequencies may offer a more effective means of reducing aviation CO2 emissions—a 10% reduction in frequency levels is found to reduce passenger demand by 5% in the short run and 7.6% in the long run—although such restrictions can create negative economic consequences. A combination of supply restrictions and pricing may offer a more balanced solution.
Role of Air Travel Demand Elasticities in Reducing Aviation's Carbon Dioxide Emissions
Evidence for European Airlines
Transportation Research Record
Transportation Research Record: Journal of the Transportation Research Board ; 2300 , 1 ; 31-41
2012-01-01
Aufsatz (Zeitschrift)
Elektronische Ressource
Englisch
Elasticities of demand for travel
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