Impacts of the COVID-19 pandemic on airline performance and tourism demand: Evidence from a quasi-natural experiment in Southwest China

This paper empirically investigates the factors that impact airline performance and the effects of airline performance on domestic tourism demand considering the impact of the COVID-19 pandemic. Firstly, the Tobit model is employed to study the significant factors and underlying mechanisms that affect flight cancellation rate. Secondly, the panel vector autoregressive model (PVAR) is applied to quantitatively measure the degree and duration of the impact of COVID-19 on flight frequency and passenger numbers. Finally, the possible impact of airline performance (flight frequency) on tourism demand during the COVID-19 pandemic is further discussed. The results suggest that travel bans, the number of confirmed cases in destination, route diversity, and share of low-cost carriers’ seats are the main reasons for the rise in flight cancellation rate, while high load factors reduce flight cancellations. Meanwhile, the negative impacts of new COVID-19 cases on both flight frequency and tourism demand gradually attenuated to stability over the study period with a lag effect. In addition, as the impact of the pandemic and travel policies gradually diminishes, airline operation recovers faster and earlier than tourism demand, indicating the airline industry may play a key role in the revival of tourism. The findings contribute to the relevant debates on the ‘air access–tourism’ relationship by taking major emergencies as a quasi-natural experiment.