This is the equivalent of three passengers boarding the 40-seat aircraft employed. Thus, in 1968 three of 40 seats were filled vs. two of eight in 1979. This example would appear a rather convincing demonstration of the inelasticity of demand for air service. Investments that will pay off in the long run will be undertaken by private capital. There is no need for subsidy.
Private firms are adequately familiar with start-up costs for new products and services.
Firms have been known to sustain several years of losses in order to build a market. In fact, the lack of willingness of a private business firm to engage in providing a service unless subsidized is a convincing expression of the firm's belief that there will not be a long-run payoff on their investment. This expenditure has involved a coercive expropriation of funds from the general public in order to finance inefficient and wasteful air service. The nation is ill served by this policy. The market place is well-suited to the task of selecting and funding investments that will increase consumer choice and welfare.