Macroeconomic Determinants of Air Travel Demand in Spain.

Abstract

This paper constructs and estimates a panel data model that predicts the number of air traffic passengers from several macroeconomic and geographic variables. The model is estimated with data from Spain (1999–2014) at the provincial level. Results reveal that economic growth and average income are the main forces driving demand, while a size effect is also clearly identified. Coastal provinces and, overall, islands also experience larger demand. Finally, a positive coefficient is estimated for the number of passengers in neighbouring airports, which reveals that the relationship of the demand among airports is characterised by complementarity rather than competition.