Monday, July 18, 2011

Evidence of Inelastic Demand for Airport Parking

Fromer's reports on airport parking as the latest target of extra fees:
Like many travelers, Hal Frost is accustomed to being hit with fees everywhere he goes, from the airport check-in counter to the hotel front desk. But long-term parking used to always be pretty straightforward: the rate he was quoted was the rate he paid.

Not anymore.

When he parked his car in New York recently through a site called NetParkNFly ( he found several fees added to his bill, including a fuel surcharge fee, a customer service fee, and an access fee. There's no explanation of these extras on the company's website.

Read more:

Hal Frost, like others I'm sure, should take this as a lesson in elasticity of demand with respect to price. You simple can't slap all kinds of fees on a good or service if the extra charges will cause people to use substitutes or avoid the purchase. Airport parking, however, seems to be inelastic in this instance so if you add additional charges onto the cost of parking demand will not decline that much. There are currently few options to parking at the airport so adding these charges will not cause a large reduction is parking demand. Hal Frost should complain about his lack of travel choices, not the cost of parking.
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