Factors driving the already witnessed demand for airline travel can be attributed to the sum of two different kinds of demand growths: First is the underlying demand increase, which naturally occurs with time even at present real-price rates and is propelled by individual factors external to the industry (Bieger, 2011). Such growths are propelled by major factors such as increases in consumer’s disposable income, trade, population and changes in consumer taste and preferences. Second is the induced demand growth which arises whenever airlines decide to raise the capacity of the markets well above the underlying demand growth (Bieger, 2011). They achieve this by creating excess capacity into the market, a factor, which makes them conclude that the cost benefits of filling those excess seats at discounted prices is better than letting the seats to travel free. Therefore, they either reduce prices or offer additional discounts to the market thus consumers are induced to air travel more often than they would have otherwise done. Consequently, the number of passengers increases to fill the extra capacity, though at discounted overall price
The prospect for long-term air travel growth is anticipated to be on the rise due to the following high driving factors; Large population coupled with the expanding middle-class and numerous emergence of markets prospects remaining bright and continuing to deliver best growth opportunities in the long-run.. There is also a continual robust evolution in terms of aircraft size driven by growth and development of significant existing hubs and city pairs across all regions in the world (Kunert, 2010). Also, the continual development of tourism in many countries plays the “travel growth catalyst” role which further affirms the stability and anticipated growth in air travel demand (Kunert, 2010)
References
Bieger, T.,(2011). What is driving the continued growth in demand for air travel? Customer value of air transport. Journal of Air Transport Management, 13(1), 31-36.
Kunert, U. (2010). Detecting Long-Term Trends in Air Travel Behaviour. Travel Behaviour Research: Prospect for Long-term Air Travel Growth, 13-37.
