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Demand Analysis for Air Passenger Service in U.S. City-Pair Markets

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  • Chi, Junwook
  • Koo, Won W.
  • Lim, Siew H.

Abstract

With single- and multi-segment market data, this paper used a heteroskedasticity-adjusted instrumental variable technique to explore the determinants of air passenger service. The results showed that price played a more prominent role than income in both single- and multi-segment markets. The results further indicated that demand of air passengers is price elastic and rises as distance increases. We found evidence that population, tourism, and business factors were significant predictors of demand. Tourism has a larger impact than the local Professional Scientific Technical (PST) industry earnings on airline demand in single-segment markets, while the inverse relationship is found in multi-segment markets. Based on these results, policymakers should focus on continuation, growth, and improvement of their air transportation infrastructure in metropolitan areas that have a high demand for business travel as well as vacation travel.

Suggested Citation

  • Chi, Junwook & Koo, Won W. & Lim, Siew H., 2010. "Demand Analysis for Air Passenger Service in U.S. City-Pair Markets," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 49(1).
    • Handle: RePEc:ags:ndjtrf:207185
    DOI: 10.22004/ag.econ.207185
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    References listed on IDEAS

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    1. Alkaabi, Khaula A. & Debbage, Keith G., 2007. "Air passenger demand and skilled labor markets by US metropolitan area," Journal of Air Transport Management, Elsevier, vol. 13(3), pages 121-130.
    2. Douglas, George W & Miller, James C, III, 1974. "Quality Competition, Industry Equilibrium, and Efficiency in the Price-Constrained Airline Market," American Economic Review, American Economic Association, vol. 64(4), pages 657-669, September.
    3. Tae H. Oum & Waters, W.G. & Jong Say Yong, 1990. "A survey of recent estimates of price elasticities of demand for transport," Policy Research Working Paper Series 359, The World Bank.
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    1. Wai Hong Kan Tsui & Faruk Balli, 2017. "International arrivals forecasting for Australian airports and the impact of tourism marketing expenditure," Tourism Economics, , vol. 23(2), pages 403-428, March.
    2. Hong Tsui, Kan Wai, 2017. "Does a low-cost carrier lead the domestic tourism demand and growth of New Zealand?," Tourism Management, Elsevier, vol. 60(C), pages 390-403.
    3. Ignacio Escañuela Romana & Mercedes Torres-Jiménez & Mariano Carbonero-Ruz, 2023. "Price Elasticity of Demand for Domestic Air Travel in the United States: A Robust Quasi-Experimental Estimation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 51(2), pages 149-167, September.
    4. Wang, Sen & Gao, Yi, 2021. "A literature review and citation analyses of air travel demand studies published between 2010 and 2020," Journal of Air Transport Management, Elsevier, vol. 97(C).

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