FlyerTalk Forums - View Single Post - Will Southwest's entry into the inter-island market lower fares?

Jan 7, 2019, 7:47 am

#11

iahphx

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Join Date: Mar 2000

Posts: 17,421

Quote:

Originally Posted by 747FC

Perfect elasticity is not a requirement to prove the effect.

Actually, from decades of observation, interisland air travel is highly elastic for Kamaaina personal travel, but a bit less so for Kamaaina business travel. All air travel follows a similar pattern. My observations are supported by some other modelers:

https://econfix.wordpress.com/2015/0...or-air-travel/

http://www.vtpi.org/elasticities.pdf

I haven't found any historical data on inter-island traffic. I assume it exists somewhere?

Of course, there would a lot of "noise" in that data. Like the growth of mainland-to-neighbor-island flights would naturally reduce demand for inter-island flying.

But I am certain that you're correct about Kamaaina personal inter-island travel being highly elastic. It would also be interesting to see the numbers on how many islands mainland visitors travel to on each trip. I would think that number would be slightly decreasing given the cost of island-hopping.

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