Airlines give discounts to travelers who book in advance and stay over a weekend. Travelers who book at the last minute and do not stay over a weekend usually pay fullprice. How does the concept of elasticity explain the difference between the two groups' demand for tickets and the airlines' pricing decisions?

Question

Stein

Social Studies

3 October, 04:45

Airlines give discounts to travelers who book in advance and stay over a weekend. Travelers who book at the last minute and do not stay over a weekend usually pay fullprice. How does the concept of elasticity explain the difference between the two groups' demand for tickets and the airlines' pricing decisions?

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Alaina Bautista · Answer 1

The travelers who book last minute and do not stay for the weekend, who are usually traveling for business, have inelastic demand. The travelers who book in advance and stay over a weekend are usually taking a vacation, a luxury, and have elastic demand. Therefore airlines charge higher prices to those who book last minute because they know that these travelers will still purchase the tickets, and they charge lower prices to those who book in advance because if the prices are higher they might choose a different airline, different form of travel, or to not take a vacation at all.