Cross elasticity: Demand for Airline Movie Systems

The increase in the price of aviation fuel is causing airlines across the world to think about how they can control costs and the obvious solution is to reduce the weight on flights to increase fuel economy even if only by a slender amount. US airways has announced that it plans to remove the in-flight entertainment systems from many of its flights in an effort to cut down on the amount of fuel - the 500lb movie systems will be discarded from domestic flights from November onwards - the decisions affects around 200 aircraft and is estimated to save around $10 million a year. It will keep movies in its widebody aircraft for international flights and trips to Hawaii (a different type of consumer demand?)

The decision is possibly bad news for Hollywood movie producers whose revenues from selling the rights for airlines to show movies might take a hit. But much depends on whether other airlines follow suit. Demand for the next generation of super-light back of seat entertainment systems is likely to grow in the coming months.