Demand Analysis of Air Transportation Industry in the United States and Australia

• Main Authors: Li-jung Su, 蘇莉容
• Other Authors: Hsin-Hong Kang
• Format: Others
• Language: en_US
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/57507825432699412229

碩士 === 國立成功大學 === 企業管理學系碩博士班 === 97 === Due to the reason of high oil price and severe competition within airline industry, some major airlines in the world have declared bankruptcy or merged with other airlines. The purpose of this research is to investigate the related factors in the demand for air travel in both the United States and Australia. To find out the factors influencing the air travel demand, this research uses log-linear regression model to examine which factors affect the demand for air travel in both the United States and Australia. In addition to those variables, dummy variable are introduced to represent the effect caused by the low-cost carriers and seasonal variation. The goal of this thesis is to test the following hypotheses.: First, we use the following variables, including a) Population, b) Income, c) Gross Domestic Product, d) Crude Oil Price, e) Consumer Price Index, f) Industry Production Index, g) Unemployment Rate, h) Air Fares, i) Price of Substitutes (CPI of Transportation), j) Low cost Carrier effect, and k) Seasonality to investigate whether they have an influence on air travel demand in the United States or Australia. Secondly, we examine if air travel is negatively related to air fare. Finally, we test whether air travel is a normal, luxury, or inferior good. By applying log linear regression model to both the United States and Australia, we conclude that in the United States, with higher income, GDP, CPI and lower unemployment rate, air travel demand will increase. However, in Australia, main factors are oil price and unemployment rate. Oil price is positively related to the demand for air travel while unemployment rate is negatively related. Moreover, the research shows that seasonal fluctuation is significantly seen in the demand for air travel. In addition, as the demand law emphasizes, the price is elasticity to the demand for air travel in both United States and Australia. Finally, from the empirical result, air traveling is considered a normal good in both the United States and Australia. Under the steadily economic situation, this study also suggests that airline should come up with method to lower cost down and introduce seasonal promotions.