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A demand model for domestic air travel in Sweden

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  • Kopsch, Fredrik

    ()
    (KTH)

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    Abstract

    The aim of this study is to estimate the price elasticity of demand for domestic air travel in Sweden. Using national aggregated data on passenger quantities and fares, price elasticities of demand are estimated with an unbalanced, in terms of stationarity, yet well performing model. The analysis also includes estimates of cross-price elasticities for the main transport substitutes to air travel, rail and road. The robustness of the results is enforced by a primitive division of business and leisure travellers. The results indicate that aggregated demand flr domestic air travel in Sweden is fairly elastic (-0.84) in the short-run and more elastic (-1.13) in the long-run. The robustness test of the model show that leisere travellers, as defined in the data, are more sensitive to price changes than are business travellers. Furthermore, the cross price elasticity between rail and air travel is found to be 0.44.

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    File URL: http://www.transportportal.se/SWoPEc/CTS2011-8.pdf
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    Bibliographic Info

    Paper provided by CTS - Centre for Transport Studies Stockholm (KTH and VTI) in its series Working papers in Transport Economics with number 2011:8.

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    Length: 19 pages
    Date of creation: 02 Nov 2011
    Date of revision:
    Handle: RePEc:hhs:ctswps:2011_008

    Contact details of provider:
    Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
    Web page: http://www.cts.kth.se/

    Related research

    Keywords: Aviation; elasticity; transport; demand;

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    1. Pagan, Adrian R & Wickens, M R, 1989. "A Survey of Some Recent Econometric Methods," Economic Journal, Royal Economic Society, vol. 99(398), pages 962-1025, December.
    2. Mason, Keith J., 2005. "Observations of fundamental changes in the demand for aviation services," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 19-25.
    3. Brons, Martijn & Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2002. "Price elasticities of demand for passenger air travel: a meta-analysis," Journal of Air Transport Management, Elsevier, vol. 8(3), pages 165-175.
    4. Martijn Brons & Eric Pels & Peter Nijkamp & Piet Rietveld, 2001. "Price Elasticities of Demand for Passenger Air Travel," Tinbergen Institute Discussion Papers 01-047/3, Tinbergen Institute.
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