Determinants of air travel demand: The role of low-cost carriers, ethnic links and aviation-dependent employment. (June 2018)

• Record Type: Journal Article
• Authors: Boonekamp, Thijs; Zuidberg, Joost; Burghouwt, Guillaume
• Is Part Of: Transportation research. Volume 112(2018)
• Page Start: 18
• Page End: 28
• Publication Date: 2018-06
• Subjects: Gravity modelling -- Airline network potential -- Low-cost carriers -- Ethnic links -- Aviation-dependent employment; Transportation -- Research -- Periodicals; 388.011
• DOI: 10.1016/j.tra.2018.01.004
• Languages: English
• ISSNs: 0965-8564

Abstract

Highlights: Ethnic links and aviation-dependent employment are tested as drivers of air travel. A two-stage least squares (2SLS) model is used to correct for endogeneity. Strong ethnic links between two countries are a significant driver for demand. A high share of aviation-dependent employment stimulates demand. Larger presence of LCCs on a route has a positive impact on demand. Abstract: This paper presents a comprehensive gravity model in which the most important determinants for air travel demand have been identified using a two-stage least squares technique. Besides including the standard demand factors like GDP, population and tourism, the effects of other determinants such as domestic traffic, low-cost carrier (LCC) activity and public service obligations are also estimated. The profound contribution of the paper lies in the inclusion of two innovative variables in the estimations: ethnic links and aviation-dependent employment. The econometric results show that both ethnic links between countries and the share of aviation-dependent employment increase passenger demand. Moreover, the results confirm that LCC presence leads to a significant increase in passenger demand, particularly on routes where Europe's largest LCCs, Ryanair and easyJet, are active.