Choose a destination (other than Australia or Australian State or Territory) and discuss the significance of air transport for tourism using relevant survey data andtourism satellite account (TSA) data

Assignment 1

These are short answer questions. Please complete all questions. In total, the collective length of  answers to all questions should not exceed two A4 pages in 11 or 12 font typeface

1. Choose a destination (other than Australia or Australian State or Territory) and discuss the significance of air transport for tourism using relevant survey data andtourism satellite account (TSA) data. [note: please consider how tourism contributes to the economy e.g., income, employment]

2. Bureau of Infrastructure, Transport and Regional Economics (BITRE) has a database of elasticities. This can be found: https://www.bitre.gov.au/databases/tedb Although somewhat out-dated, these elasticities highlight the importance of elasticity in policy-making. The following is Table 1A07 from the above database.

2(a).  Are the income elasticities of tourism demand above applicable 30 years on? (Pre-COVID international tourism in 2019). Explain your answer.

2(b) ‘Air transport liberalisation of price elastic routes will benefit both tourism destinations and airlines.’ Discuss the circumstances under which this statement is likely true.

3. Refer to Reading 4 (ACCC final decision on DJ-NZ alliance) of Unit 3.

3(a).  In 5.225, it reads “the applicants submit that by providing online connections between Air New Zealand’s domestic New Zealand network and Virgin Blue’s domestic Australian network via high frequencies across the Tasman, the convenience and attractiveness of visiting such destinations would be…” (p.61). Is this an example of scale economies or network economies? Explain.

3(b) The DJ-NZ alliance was approved by the ACCC. However, alliances may lead to greater concentration of market power. What were the main reasons for this approval?

4. Refer to Duval (2008) of Unit 3 (Australian government`s decision on SQ`s Pacific route entry). How does the Pacific route case illustrate the key costs and benefits of air liberalisation policy? Explain.