Quantifying market potential for sustainable air connectivity improvement – A counterfactual analysis based on augmented gravity model estimates

Lan Bing Li, Xiaowen Fu, Zheng Lei, Kun Wang, Sandra Seno Alday

Research output: Journal article publicationJournal articleAcademic researchpeer-review

1 Citation (Scopus)

Abstract

Governments and policymakers aim to promote the air connectivity of their airports and cities. However, improved air connectivity is sustainable only if the associated aviation market potential is sufficiently large. Although qualitative and quantitative studies have identified the key determinants of aviation demand, few publicly available studies have quantified the market potential of direct flight services. This study estimates an augmented gravity model based on historical data on actual traffic volume, flying distance and market structure indicators. The estimates are then used to conduct a counterfactual analysis to predict the market potential if direct aviation services were offered on the candidate routes, so that the most promising routes can be identified and ranked. The approach is applied to examine the cases of large airports in mainland China and the UK. Our analysis offers insights on the potential of individual markets and concludes that it is possible to sustain more direct aviation services out of second-tier hub airports in China and Europe. Policy and financial support on these routes are likely to be sustainable, beyond which caution may need to be exercised for one-shot investments.

Original languageEnglish
Article number100425
JournalResearch in Transportation Business and Management
Volume34
DOIs
Publication statusPublished - Mar 2020

Keywords

  • Aviation services
  • Counterfactual analysis
  • Gravity model
  • Market potential

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Business and International Management
  • Transportation
  • Economics, Econometrics and Finance (miscellaneous)
  • Tourism, Leisure and Hospitality Management
  • Strategy and Management
  • Management Science and Operations Research

Cite this