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Elasticity of demand for domestic air transport in vietnam by price and income

Author: 
Nguyen Hai Quang
Subject Area: 
Social Sciences and Humanities
Abstract: 

This study aims to determine the elasticity of demand for domestic air transport in Vietnam by air fare and per capita income. From the theoretical base and forming of research model, this study analyzes data of airlines of Vietnam for the period of 10 years from 2007 to 2016. The results show that air fare and per capita income are important factors affecting the demand for domestic air transport in Vietnam. Accordingly, the elasticity of demand for the whole market by air fare is -0.7047 and the per capita income is 2.3112. For the market operated by traditional airlines or full services carrier (FSC), the elasticity coefficients of demand by air fare and per capita income are -1.7095 and 2.0159 respectively. As to the market operated by the low cost carriers (LCC), the elasticity coefficients by air fare and per capita income are -3.5052 and 5.7514 respectively. The results of this study are the basis for helping airlines of Vietnam and Civil Aviation Authority of Vietnam in market forecasting and selection of appropriate pricing policy.

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