CHAPTER 2 2.0 Literature Review Nowadays, the trends for demand of the air transport are increasing. Airline industry has been transformed compare to before especially demand of using the air transport. It also becomes as the sector which experience the fastest growing sector compare to the other sector. This increasing of demand can be show out customer has gets their beneficiaries from using this kind of air transport. However, fastest growing of the airlines industry also brings the challenges because of the rising trend toward air transport demand. Purpose for this paper is to examine that how the price, service quality and advertising and promotion influence people to choose flight as the transportation. 2.1 Price According to the Business Dictionary (https://www.businessdictionary.com/), price is a value that exchange or transfer for the possession. The buyer is pleased to pay and seller is pleased to accept and the competition is allowed to exist. All of this is the basic thing in the business dealing activities. However from the American Economic Review has detailed 117 meaning of price no matter in monetary or non monetary meaning or even in the objective and subjective meaning. R.Commons (1929), state that price can be separated in the value or debt and price is related to the scarcity of commodity, money and waiting. Further, price is a critical thing to an organization which enables to affects or affects by the function of an organization. There have some understanding which done by Monroe (2003), state that price sensitivity can divided into two dimension which is price awareness and price consciousness. The buyer who has the ability to remember the price is called as the price awareness conversely buyer who sensitive to price differential is price consciousness. Thus these price sensitive degrees are affecting to their purchasing behaviors. In economics perspective, this price sensitivity is measured by using the price elasticity to the demand. Price is an important issue for public transport such as bus, train, taxi to earn their profit for the continuous operation. Generally, if the elasticity is negative value we can see that price increases the number of consumer that patrons toward the public transport will be decrease and vice versa. So that the elasticity concept is emerge to express the proportional change in number of patrons to the proportional changes in the prices. The price elasticity for the public transport in rural area is higher than urban area (Paulley et al., 2006). From the Transport and Road Research Report Laboratory (2004), shows that there was negative value and more elastic demand for the bus price in the short run distance if compare to the long run distance. Moreover, from Roza et al. (2013), a case study in Peninsular Malaysia shows users pay attention to the price increase of the intercity bus and train. Users also give the response which shift from bus to train because of reduction of price in the intercity train. This has strongly showed that the price changes influence the user toward choice of mode of transport in this case study.
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