Air transport capacity and tourism demand: A panel cointegration approach with cross-sectionally augmented autoregressive distributed lag (CS-ARDL) model

Rockie U Kei Kuok, Tay T.R. Koo and Christine Lim

Tourism Economics, 2024, vol. 30, issue 3, 702-727

Abstract: This research aims to quantify the effect of air transport capacity on tourism demand by examining their long-term (cointegrating) relationship, accounting for cross-sectional dependence and endogeneity. Panel time series data from 2008Q1 to 2019Q4 for international tourist arrivals from 16 main origins to six Australian states are investigated. The study finds 1% increase in Available-Seat-Kilometers, seat capacity, or flight frequency can result in 0.4%–0.7% increase in tourist arrivals to Australia, adding to the body of evidence that shows a non-negligible aviation-led generative effect on tourism demand. The study finds ignoring cross-sectional dependence can result in significantly different, and potentially incorrect, coefficient estimates. Although using pre-COVID data, the results are useful in highlighting the likely aviation supply—tourism demand relations under reasonably well-performing market conditions. For greater tourism demand, findings call for more liberal international air services agreements, and direct/indirect air route development subsidies with minimum commitment of several years.

Keywords: air transport capacity; tourism demand; cointegration; autoregressive distributed lag model; panel time series; cross-sectional dependence; Australia (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/13548166231178355 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:30:y:2024:i:3:p:702-727

DOI: 10.1177/13548166231178355

Access Statistics for this article

More articles in Tourism Economics
Bibliographic data for series maintained by SAGE Publications ().