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

Luca J. Santos (), Alessandro Oliveira and Dante M. Aldrighi ()

No 2021_14, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: The economic downturn and the air travel crisis triggered by the recent Coronavirus pandemic pose a substantial threat to many emerging economies’ new consuming class. In Brazil, considerable improvements in social inclusion have fostered the emergence of hundreds of thousands of first-time fliers in the past decades. We propose a methodology for identifying air transport markets characterized by greater social inclusion, using indicators of the local economy’s income distribution, credit availability, and access to the internet. We perform an empirical analysis of the air travel demand’s plunge since the pandemics, differentiating markets by their social inclusion intensity. Controlling for the potential endogeneity stemming from the spread of the COVID-19 through air travel, our results suggest that regional routes–but not routes feeding larger airports–are among the most impacted markets. Besides, we estimate that a market segment with one percent higher social inclusion is associated with a 0.9 percent more pronounced decline in demand during the pandemic. Therefore, markets that have benefited from greater social inclusion in the country are the most vulnerable to the current crisis.

Keywords: air transport demand; emerging markets; COVID-19; LASSO regression (search for similar items in EconPapers)
JEL-codes: D22 L11 L93 (search for similar items in EconPapers)
Date: 2021-04-22
New Economics Papers: this item is included in nep-ict and nep-tre
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: 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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