Income and Cross Elasticity

Tourism Industry in Canada

In the latest data from Statistics Canada shows signs of promise that year 2012 might be a year of growth in international tourism arrivals in Canada. Not only the monthly figures promising, but January to April figures continues to hold strong. Between January and April, 2012, visits to Canada from countries other than the U.S. were 7.5% higher than in the same period in 2011. Arrivals from the U.S., meanwhile, were 4.7% higher than in the same period a year earlier. Overall, year-to-date visitation is at 3,277,000, approximately 5.4% higher than the 3,100,000 visitors welcomed here over the same period in 2011.

Source: http://tiac.travel/

Source: http://en-corporate.canada.travel/

Source: www.canadabusiness.ca/eng/guide/2026

Air travel looks like an example of income elastic product. According to the data from the sources, we can assume that if the household’s income rises, almost all of that additional income would be spent on the luxuries that previously could not be purchased. Luxury items usually have higher income elasticity because when people have a higher income, they don't have to forfeit as much to buy these luxury items.This is a reflection of the fact that most people consider such services as travel.