cause the demand elasticity to have different prices, varies due to different market segments and regions. Some of the other factors that are high elasticities are the air carriers, and the routes available. Since the consumers have multiple options to choose from, this makes the airline company and the routes high elasticity. According to Litman (2019), Business travelers tend to be less price elastic than leisure travelers. Fare elasticities on short-haul routes were generally higher than on long-haul routes. This reflects the opportunity for inter-modal substitution (e.g., travelers can switch to rail or automobile). The demand elasticity faced by individual air carriers is higher than that faced by the whole market. Virtually all studies estimate income elasticities to be above one, generally between +1 and +2. This indicates air travel increases with higher incomes.
To be able to determine the total costs to the user for air travel, you would have to take into account all of the costs for that specific airline. For instance, the airlines have to pay for fuel, terminal costs of the airports they are departing and arriving to, employee costs, and maintenance costs. All of these factors factor into the total traveling cost for a single user. The prices may vary between air carriers because of operating costs may be cheaper for one than it is to another. It may vary as well based on the airplane that is being used. Some use more fuel than others and different routes will change this as well. The total costs for air travel also has to factor in any baggage fees depending on the airline and the government costs or taxes associated with that ticket they purchase. Another factor that airlines have to factor in, is the demand for that route. If it is a very common route, typically the price of a ticket is cheaper than a route that is less traveled on and does not have as many passengers.
According to an article published in fox news, there are 9 factors that influence the price of your ticket. These 9 factors are, price of oil, flight distance, competition, timing of purchase, timing of flight, big brother factor(government taxes), passenger appetite, empty middle seats, and fees. Using these factors you can determine the total costs of to the user for air travel.
References:
Litman, T. 2019. Understanding Transport Demands and Elasticities – How Prices and Other Factors Affect Travel Behavior. Retrieved from: https://www.vtpi.org/elasticities.pdf
9 surprising factors that influence the price of your airline ticket. (January 13, 2014). Fox News – Airlines. Retrieved from: https://www.foxnews.com/travel/9-surprising-factors-that-influence-the-price-of-your-airline-ticket
