Interpreting economic data - taking off: the development of the air travel industry in the United States

Most products go through a life-cycle with certain common features across a wide range of different industries. In the early stages a new product has relatively few outlets and is often viewed as a luxury item by consumers. Sales are therefore low and prices are high when it first appears on the market. However, as the product becomes established, production methods are standardised, costs and prices fall and it gradually takes on the characteristics of a mass-market good. This leads to a period of rapid growth which levels off as sales reach the potential capacity of the market. At this time the market may stabilise or even go into a period of decline as rival products enter the market or as low cost foreign competition replaces domestic production. In this article we will discuss the product life-cycle for domestic air travel in the United States. This is an interesting industry because air travel has only existed for about the last eighty years and so we have accurate statistics which allow us to trace out its development from an infant to a mature industry. The plan of the article is as follows. In the next section we seek to identify the key stages of transition for this industry. This is followed by an assessment of the effects of the business cycle on this market in its mature stage of development. Finally, we present some overall conclusions and some questions for further discussion.