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Oil Shocks and Air Travel Demand: Insights From Korea and Japan

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  • Jungho Baek
  • Soojoong Nam

Abstract

This research explores the effects of various oil shocks—supply, aggregate demand, and oil‐specific demand—on the demand for air passenger and freight services in South Korea and Japan. Employing structural vector autoregressive (SVAR) and autoregressive distributed lag (ARDL) models, it analyzes data from 2000 to 2022. The findings indicate that different oil shocks, especially two types of demand shocks, substantially impact air travel demand in these countries. The study also points out the significant roles economic growth and exchange rates play. These outcomes highlight the critical need to integrate oil price dynamics into air travel demand models, considering the specific economic contexts of South Korea and Japan. The study concludes by offering policy recommendations to mitigate the impacts of oil price fluctuations on air travel, underscoring the need for adaptive strategies within the aviation industry to manage these changes effectively.

Suggested Citation

  • Jungho Baek & Soojoong Nam, 2025. "Oil Shocks and Air Travel Demand: Insights From Korea and Japan," Australian Economic Papers, Wiley Blackwell, vol. 64(4), pages 457-472, December.
    • Handle: RePEc:bla:ausecp:v:64:y:2025:i:4:p:457-472
    DOI: 10.1111/1467-8454.70001
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