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The impact of security oversight on air cargo price and demand

Author

Listed:
  • Arim Park

    (North Carolina A&T State University)

  • Min Kyung Lee

    (Baylor University)

  • Hyosoo (Kevin) Park

    (University of Dayton)

  • Ji-Hung (Ryan) Choi

    (Eastern Michigan University)

  • Ju Myung Song

    (University of Massachusetts Lowell)

Abstract

This paper examines the effect of security oversight on air cargo price and demand. We exploit variations in security oversight instituted by the International Civil Aviation Organization (ICAO). We estimate a simultaneous equation model using proprietary operations data from a major airline in South Korea over the period 2009–2013. This study explores the shipping-charge behavior of a service provider through a modeling approach that considers air cargo security. Our findings show that security oversight increases air cargo demand, controlling for the effect of price. Improving security measures increases the air cargo price, but the magnitude of this increase is small. Our results should help policymakers gauge the benefit of improved security and help airlines design an effective model to determine future air cargo shipping charges under high uncertainty to mitigate short- and long-term financial risks.

Suggested Citation

  • Arim Park & Min Kyung Lee & Hyosoo (Kevin) Park & Ji-Hung (Ryan) Choi & Ju Myung Song, 2023. "The impact of security oversight on air cargo price and demand," Journal of Transportation Security, Springer, vol. 16(1), pages 1-22, December.
    • Handle: RePEc:spr:jtrsec:v:16:y:2023:i:1:d:10.1007_s12198-023-00259-z
    DOI: 10.1007/s12198-023-00259-z
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    References listed on IDEAS

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