A passenger demand model for air transportation in a hub-and-spoke network

Chieh-Yu Hsiao and Mark Hansen

Transportation Research Part E: Logistics and Transportation Review, 2011, vol. 47, issue 6, 1112-1125

Abstract: This paper develops an air passenger model that deals with city-pair demand generation and demand assignment in a single framework. Using publicly available and regularly collected panel data, the model captures both time series and cross-sectional variation of air travel demand. The empirical analysis finds that pattern of correlations among alternatives can be described by a three-level nested logit model. Fare, frequency, flight time, direct routing, on-time performance, income, and market distance have significantly effects on air demand. Correcting for the problem of endogenous air fares using instrumental variables yields more plausible estimates of price sensitivity and value of time.

Keywords: Demand model; Route choice; Instrumental variables; Value of travel time; Panel data (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (45)

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DOI: 10.1016/j.tre.2011.05.012

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