This paper presents a comprehensive gravity model in which the most important determinants for air travel demand have been identified using a two-stage least squares technique. Besides including the standard demand factors like GDP, population and tourism, the effects of other determinants such as domestic traffic, low-cost carrier (LCC) activity and public service obligations are also estimated. The econometric results show that both ethnic links between countries and the share of aviation-dependent employment increase passenger demand. Additionally, positive and significant impacts were shown between the share of people employed in knowledge-intensive services and high-tech manufacturing and the demand for air travel. On routes with a higher share of people working in these aviation-dependent sectors, demand for air travel appears to be significantly higher. Moreover, the results confirm that LCC presence leads to a significant increase in passenger demand, particularly on routes where Europe’s largest LCCs, Ryanair and easyJet, are active.
Collected and summarized from the source below by Giang Tan https://db.vista.gov.vn:2095/science/article/pii/S0965856418300156