TOPIC: Impact of Oil Prices on Aviation Industry

Explain the following points in paragraphs. Ensure that the sub-points are mentioned and clearly explained. Remember to include references from scholarly sources.

Elasticity of Aviation Fuel as a Commodity

• Airline pricing
• Differences in the long-term (more elastic i.e. fuel hedging) and short-term
• Demand for sustainable fuel in the aviation industry (long-term and short-term issues)

Elasticity of Airline Ticket Pricing

• Cross price elasticity
• Price ceiling on oil to reduce the price of air ticket (i.e. govt and IATA)

Fuel Hedging Effect on Airline Ticket Prices

• Subsidy from tax payers and all?