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Aviation fuel demand development in China

Author

Listed:
  • Chai, Jian
  • Zhang, Zhong-Yu
  • Wang, Shou-Yang
  • Lai, Kin Keung
  • Liu, John

Abstract

This paper analyzes the core factors and the impact path of aviation fuel demand in China and conducts a structural decomposition analysis of the aviation fuel cost changes and increase of the main aviation enterprises’ business profits. Through the establishment of an integrated forecast model for China’s aviation fuel demand, this paper confirms that the significant rise in China’s aviation fuel demand because of increasing air services demand is more than offset by higher aviation fuel efficiency. There are few studies which use a predictive method to decompose, estimate and analyze future aviation fuel demand. Based on a structural decomposition with indirect prediction, aviation fuel demand is decomposed into efficiency and total amount (aviation fuel efficiency and air transport total turnover). The core influencing factors for these two indexes are selected using path analysis. Then, univariate and multivariate models (ETS/ARIMA model and Bayesian multivariate regression) are used to analyze and predict both aviation fuel efficiency and air transport total turnover. At last, by integrating results, future aviation fuel demand is forecast. The results show that the aviation fuel efficiency goes up by 0.8% as the passenger load factor increases 1%; the air transport total turnover goes up by 3.8% and 0.4% as the urbanization rate and the per capita GDP increase 1%, respectively. By the end of 2015, China’s aviation fuel demand will have increased to 28 million tonnes, and is expected to be 50 million tonnes by 2020. With this in mind, increases in the main aviation enterprises’ business profits must be achieved through the further promotion of air transport.

Suggested Citation

  • Chai, Jian & Zhang, Zhong-Yu & Wang, Shou-Yang & Lai, Kin Keung & Liu, John, 2014. "Aviation fuel demand development in China," Energy Economics, Elsevier, vol. 46(C), pages 224-235.
  • Handle: RePEc:eee:eneeco:v:46:y:2014:i:c:p:224-235
    DOI: 10.1016/j.eneco.2014.09.007
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    Cited by:

    1. Chen, Zhongfei & Wanke, Peter & Antunes, Jorge Junio Moreira & Zhang, Ning, 2017. "Chinese airline efficiency under CO2 emissions and flight delays: A stochastic network DEA model," Energy Economics, Elsevier, vol. 68(C), pages 89-108.

    More about this item

    Keywords

    Aviation fuel demand; Aviation fuel efficiency; ETS; ARIMA; Bayes;

    JEL classification:

    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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