Flying in the Face oF jobs and growth - British Chambers of Commerce

36
chaPter 2:
wHAt uK Business needs FroM AviAtion
to HelP deliver joBs And growtH
55. cAA (2010), op. cit
56. department for
transport (2011) ‘uK
Air Passenger and co2
demand Forecast’
57. cAA (2010), op. cit.
wHy coMPetitive Air
trAnsPort Pricing HelPs
Foreign trAde
Business trAvel Price
elAsticity
Price elasticity measures the change
in demand for flights triggered by
a change in ticket prices. in the last
decade, experts have estimated the
price elasticity of business travel
as ranging from -0.2 to -0.7 55 . this
means a 10% rise in ticket prices
would result in a reduction in
business flights taken of between 2%
and 7%. in its 2011 traffic forecasts,
the department for transport (dft) 56
uses price elasticities of -0.2 and -0.3
for foreign and domestic business
travel, respectively.
tHe Business MArKet
BecoMes More
segMented And More
Price sensitive
However, broad economic ratios
like price elasticity only provide an
overall guide to the behaviour of
business travellers. Behaviour within
specific segments of the business
flight market may be different.
over the last two decades, airlines
have tailored the types of tickets
they offer to an increasing number
of different categories of passenger,
leading to greater choice. the
result has been a softening of the
boundaries between the traditional
business and leisure segments of
the market. in a recent analysis of
business travel 57 , the cAA analysed
these trends. it presents data
showing how an increasing number
of business travellers make use of
economy tickets and summarises the
trend as follows:
Against a background
of tighter travel
policies, short haul
business passengers
are now more likely
to choose ‘best fare
on the day’, despite
any penalties for rebooking,
because of
the potential
savings
table 4: Business PAssengers
trAvelling econoMy on
FligHts to/FroM MAin london
AirPorts
FroM ProPortion oF
bUsiness Passengers
Flying econoMy
nortH
AMericA
otHer
long-HAul
1996 2007 2009
62% 59% 67%
67% 67% 79%
sHort-HAul 59% 91% 95%
(source: cAA)