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A product or service's demand elasticity can be defined as the level to which demand is sensitive to variations in the selling price of the product or service. When it comes to air travel, demand elasticity can be influenced by several different factors, such as the cost of fuel, the season, the number of available alternative modes of transportation, and the amount of rivalry among airlines.

According to a study that was published in the Journal of Air Transport Management, demand elasticity can significantly affect how much airfare costs. The study analyzed data from 120 routes across the United States and found that a one percent increase in demand elasticity led to a 0.22 percent decrease in the price of airfare (Bilotkach, Gorodnichenko & Talavera, 2011). When there is an elastic demand for air travel, a slight increase in airfare can result in a substantial decline in the number of people willing to purchase it. On the other hand, when demand is inelastic, the price rise might not make a big difference in how many individuals are willing to travel (Borenstein & Rose, 2014).

Demand elasticity can significantly affect the cost of air travel for a single user. One must consider a variety of price considerations, including ticket price, taxes, fees, luggage fees, and any other supplemental costs, in order to construct a model that accurately depicts the entire cost of travel. Users can benefit from an understanding of demand elasticity and how it affects the costs of transportation by making more informed decisions about when and where they travel to keep their expenses to a minimum.