Of all the marketing variables that influence the potential sales of airline seats and cargo capacity, price has received the most attention since deregulation. Pricing remains a very complex issue in almost all industries. In the case of air transportation, it is even more complex because of the transition in recent years from a highly regulated industry to a deregulated industry.
The midterm question is what do you think the most important factors are when discussing airline pricing and demand? I figured I would start out talking about what demand really is. Demand is defined as the various amounts of a product or service that consumers are willing and able to purchase at various prices over a particular time period. .After taking two economic classes that definition is permanently engrained in my memory. A demand schedule is a tabular portrayal of demand and reflects the relationship between the price or fare "which I believe is an important factor when discussing airline pricing and demand "and the estimated number of passengers who would be willing and able to purchase a ticket at each of these prices. .
A common characteristic of demand is that as price falls, the quantity demanded rises; alternatively, as price increases, the corresponding quantity demanded falls. There is an inverse relationship between price and quantity demanded, which is depicted on all demand curves. This inverse relationship has been labeled the law of demand. The law of demand is based on the principle that people buy more at a low price than they do at a high price. It is really very elementary. .
The demand for airline tickets is primarily based on price, but there are other determinants of demand in the air travel market which are: preferences of passengers, number of passengers, financial status and income levels of passengers, prices of competitors and related travel expenses, and passengers' expectations with respect to future prices.