A demand model for domestic air travel in Sweden

Fredrik Kopsch

No 2011:8, Working papers in Transport Economics from CTS - Centre for Transport Studies Stockholm (KTH and VTI)

Abstract: The aim of this study is to estimate the price elasticity of demand for domestic air travel in Sweden. Using national aggregated data on passenger quantities and fares, price elasticities of demand are estimated with an unbalanced, in terms of stationarity, yet well performing model. The analysis also includes estimates of cross-price elasticities for the main transport substitutes to air travel, rail and road. The robustness of the results is enforced by a primitive division of business and leisure travellers. The results indicate that aggregated demand flr domestic air travel in Sweden is fairly elastic (-0.84) in the short-run and more elastic (-1.13) in the long-run. The robustness test of the model show that leisere travellers, as defined in the data, are more sensitive to price changes than are business travellers. Furthermore, the cross price elasticity between rail and air travel is found to be 0.44.

Keywords: Aviation; elasticity; transport; demand (search for similar items in EconPapers)
JEL-codes: C22 D12 Q58 R41 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2011-11-02
New Economics Papers: this item is included in nep-tur and nep-ure
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http://www.transportportal.se/SWoPEc/CTS2011-8.pdf (application/pdf)

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Journal Article: A demand model for domestic air travel in Sweden (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:ctswps:2011_008

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