The economic impact of the cost-of-living crisis has been felt quite severely across many countries worldwide. Issues such as poverty, income distribution, trade and investment have all been affected in different ways and to different levels by falling living standards.
One of the major impacts of the crisis has been on households’ demand for goods and services and on aggregate consumption in the economy. Faced with a drop in demand, firms need to consider how best to react to the change in economic environment. This article focuses, in particular, on how the crisis has affected the short-haul low-cost airline industry and how the industry is coping with the challenge. This case study provides a valuable opportunity to see economics in action and to use evidence and economic theory to make sense of the shocks affecting the economy.
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