Testing the differentiated impact of the COVID-19 pandemic on air travel demand considering social inclusion

Luca J. Santos, Alessandro Oliveira and Dante Mendes Aldrighi

Journal of Air Transport Management, 2021, vol. 94, issue C

Abstract: The economic downturn and the air travel crisis triggered by the recent coronavirus pandemic pose a substantial threat to the new consumer class of many emerging economies. In Brazil, considerable improvements in social inclusion have fostered the emergence of hundreds of thousands of first-time fliers over the past decades. We apply a two-step regression methodology in which the first step consists of identifying air transport markets characterized by greater social inclusion, using indicators of the local economies’ income distribution, credit availability, and access to the Internet. In the second step, we inspect the drivers of the plunge in air travel demand since the pandemic began, differentiating markets by their predicted social inclusion intensity. After controlling for potential endogeneity stemming from the spread of COVID-19 through air travel, our results suggest that short and low-density routes are among the most impacted airline markets and that business-oriented routes are more impacted than leisure ones. Finally, we estimate that a market with 1% higher social inclusion is associated with a 0.153%–0.166% more pronounced decline in demand during the pandemic. Therefore, markets that have benefited from greater social inclusion in the country may be the most vulnerable to the current crisis.

Keywords: Air transport; Emerging markets; Demand; COVID-19; LASSO regression (search for similar items in EconPapers)
JEL-codes: D22 L11 L93 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: Testing the differentiated impact of the COVID-19 pandemic on air travel demand considering social inclusion (2021)
Working Paper: Testing the differentiated impact of the COVID-19 pandemic on air travel demand considering social inclusion (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:94:y:2021:i:c:s096969972100065x

DOI: 10.1016/j.jairtraman.2021.102082

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