Applied Transport Economics: Policy, Management & Decision by Stuart Cole

By Stuart Cole

* totally up-to-date 3rd variation of a longtime shipping textbook

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Extra resources for Applied Transport Economics: Policy, Management & Decision Making

Sample text

The increase in the coach share of the market was due partly to price elasticity and partly to cross-price elasticity effects. 4) for a commuter journey, despite a journey time increase of half an hour, would induce the transfer of some train passengers to the coach service. The cross-price elasticity is the proportion of rail passengers transferring in relation to the proportionate change in the coach fare. This illustrates the competitive reality of short to medium distance passenger travel. There is competition between coach and rail in 40 Elasticity of Demand some segments and between rail and air in others.

YB (1984) Bournemouth Yellow Buses campaign ‘Get around on the Yellows’. 35 CHAPTER 2 Elasticity of Demand PRICE ELASTICITY OF DEMAND Introduction The term elasticity is one which may seem complex, but is clearly illustrated by the day to day marketing of the transport industry in the various advertising campaigns seen in the media. Consider the range of train operator return fares per person from London to Cardiff and Newcastle. 1 Rail fare options from London (2004) Fare type (return) First Great Western to Cardiff (145 miles) 1st Standard (£) (£) GNER to Newcastle (270 miles) 1st Standard (£) (£) Open4 Saver4 Super saver4 Super advance1 Apex3 Off-peak one Off-peak two Off-peak three 169 114 264 51 107 49 41 36 24 593 822 1021 176 84 62 48 203 342 481 Source: First Great Western (FGW, 2004a); GNER Notes: 1.

2 shows how transatlantic fares have fallen. In 2004 prices the single fare by BOAC from London to New York in 1950 was £1500 (£125 in 1950 prices). The Laker airways price in 1980 was £50 (or £600 in 2004 prices). The low fares market had begun. Airlines bought larger aircraft (eg the Boeing 747 ‘jumbo’) that they had to fill. Thus the fares were considerably lower in real terms in 2004 compared with 50 years previously. 3). The relationship to wages emphasises the fact that in 1950 few could afford these air fares and so demand was restricted, but in 1980 this new passenger market was opened up and has continued into the 2000’s.

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