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Driving Down Personal Aviation Demand

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  • Anthony Wiskich

Abstract

This paper investigates the potential long-run effects of autonomous and electric vehicles, and a carbon tax, on personal domestic aviation demand in Australia. We estimate a discrete choice disutility model with two travel modes — car and air — using Australian National Visitor Survey data and Bayesian priors. We use multiplicative Fréchet errors, consistent with a constant elasticity of substitution utility function for a representative consumer of both modes. An elasticity of substitution of almost 4 replicates the observed transition to air travel as distances increase. Combining in turn electrification, autonomy, the use of overnight robotaxis, a 10 kph increase in average car speeds, and an AUS$200/tCO2e carbon tax leads to air passenger reductions of 5%, 19%, 22%, 28% and 43%, respectively. Reductions are highest for shorter flights, so aggregate emissions do not decline as much as passenger numbers, while the number of aircraft trips declines more.

Suggested Citation

  • Anthony Wiskich, 2025. "Driving Down Personal Aviation Demand," CAMA Working Papers 2025-48, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2025-48
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    File URL: https://crawford.anu.edu.au/sites/default/files/2025-08/48_2025_Wiskich.pdf
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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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