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measured by the amount of money spent on tour,
but less elastic when measured by the number of
tourists or tourist nights. This implies that people
are unwilling to refrain from travelling but, rather,
travel with smaller budgets. Correspondingly, price
elasticity of demand exposes the percentage change
in tourism demand in relation to an equal change
in the product price.
Tourism demand may be categorised according
to the willingness and ability of tourists to participate
in tourism activities. Effective demand �also called
actual or aggregate demand) consists of people who
actually take part in tourism activities �that is, the
buyers collectively). The size of this group of tourists
is the easiest to measure as they, having physically
moved to the site of activities, are traceable. Latent
demand �also called suppressed demand) refers to
would-be buyers. This type consists of the deferred
and potential demand. Deferred demand refers to
those who have the will to participate in tourism
activities but cannot, as they lack supporting
knowledge or an access to tourism facilities, or
both. The passivity of this type is due to the
inefficiency of the supply sector to provide and
market their products. Potential demand consists of
those who have the will to participate but lack
supporting social and economic circumstances. In
other words, they do not have enough money or
other resources to accomplish their tourism plans.
Their participation would require an improvement
in their socioeconomic environment. Finally, people
showing no demand have neither the will nor
possibilities to participate in tourism activities.
Other types of tourists may be identified to fit
the given task and field of study. For example, a
geographer focuses on the spatial distribution of
demand, an economist examines the volume of
demand and its reactions to economic changes,
and a psychologist observes motivations behind
journeys.
Tourism may be an end in itself or an
unavoidable side effect of some other activity. Most
forms of recreation and holiday tourism fall into
the first category, as people buy tours to selected
destinations, spend the chosen period of time there,
and return. Business travel, on the other hand,
often falls to the second category, as the trip itself is
not the primary goal but rather a means to
accomplish some other aim, such as success in
business negotiations that take place at the
destination. In this case, tourism constitutes an
input required in a production or learning process.
Further reading
Crouch, G. I. �1994a) `The study of international
tourism demand: a survey of practice', Journal of
Travel Research Spring: 41±55. �Presents an overview
of empirical studies on international
tourism demand over three decades.)
ÐÐ �1994) `The study of international tourism
demand: a review of findings', Journal of Travel
Research Summer: 12±57. �Reviews findings of
empirical studies on international tourism demand
over three decades.)
Faulkner, B. and Valerio, P. �1995) Àn integrative
approach to tourism demand forecasting', Tourism
Management 16�1): 29±37. �Presents a view to
the dialogue between tourism demand analysts
and decision makers based on the Australian
experience.)
demand, air travel
demand, air travel 137
MARJA PAAJANEN, FINLAND
The most important lesson to learn is that there are
multiple demands from multiple customer segments
for multiple airline services. The complexity
of airline markets and perishability of airline
service makes demand management a key to
customer service and airline profitability.
Pricing affects the demand for airline services.
One important demand dimension is elasticity, the
responsiveness of demand to price changes. Availability
of substitutes, travel purpose, passenger
preferences, prices, market size, and complementary
and competitive service prices are important
demand elasticity determinants.
Much of the cost of available seat kilometres
�ASK) is inescapable, with some differences between
class of service. Since this ratio cannot be
inventoried, the marginal cost of filling an otherwise
empty seat is very small. The key to profitability is
minimising unsold seats and thus maximising the
revenue contribution. Both require a clear understanding
and control of airline service demand.