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130 comments on Aviation and Oil Depletion

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andytk on December 19, 2006 - 3:34am Permalink | Subthread | Parent | Comments top
"eg. If the ticket price rose to twice its current level, volumes would more than halve. That in turn would push up prices even further as economies of scale work in reverse."

My take on this, is that, during the 1970's ticket prices for aiviation were at least twice (in real terms) what they are now.

The airlines were financially viable then, why not now.  After all, much airline business is corporate, and they would accept a price increase as the cost of doing business overseas.

The tourist market may suffer, but I'm not convinced that the internal domestic market would suffer too much.  See my other post below.

Andy

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John McFadden on December 19, 2006 - 6:44am Permalink | Subthread | Parent | Comments top
I checked a Canadian government study on demand elasticity in air travel.

For domestic flights, which would include flights to and in the US, both business and leasure travel have median elasticity just slightly greater than 1, with leasure just slightly more elastic.

However, for international business travel elasticity is .265.  

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Jason Bradford on December 19, 2006 - 1:53pm Permalink | Subthread | Parent | Comments top
The Hirsch Report claims that about 50% of airline travel is "discretionary." (http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf):  

"In the short run, much of the burden of adjustment will likely be borne by decreases in consumption from discretionary decisions, since 67 percent of personal automobile travel and nearly 50 percent of airplane travel are discretionary."

Of course what that really means is interesting.  What proportion of eating and drinking is discretionary? If flying is cut down by 90% does that mean we perish?

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