The Concorde and Boeing SST business cases were built on a couple flawed assumptions.
First, jet fuel would remain dirt cheap and the higher fuel burn of supersonic travel not contribute significantly to cost of operation - which was blown out of the water by the first Arab oil embargo.
Second, that the majority of demand for air travel would remain for the 'premium' product - basically that the majority of people would happily pay a premium to get there faster. This assumption applied to most people who flew on jets in the 1960's - either business travelers or well to do people that weren't that worried about what it cost.
Reality was it went the opposite direction - a shift that started with the 747 and other widebodies. The economies of the wide body aircraft lowered the cost of air travel to the 'everybody' level. Suddenly there was a whole new class of air traveler - people for whom an extra $100 airfare meant they just wouldn't go, never mind that they'd get there in half the time. In short, they didn't foresee air travel becoming just another commodity - the low cost trend that continues today.
The reality was, both the Concorde and the SST needed to sell hundreds of copies to even begin to justify the development costs. The evolution of air travel into a low cost commodity, combined with the rising costs of jet fuel, insured that would never happen.
Last edited by tdracer; 19th Oct 2013 at 00:18.
Reason: edited to fix typos