Demand for Air Travel
in the United States: Bottom-up Econometric Estimation and Implications
for Forecasts by Origin and Destination Pairs
2003 Award Winner
Dipasis Bhadra, The MITRE Corporation
ABSTRACT
In this paper, we examine the relationship between origin and destination
(O&D) travel and local area characteristics. By combining data from
the Bureau of Transportation Safety of the U.S. Department of Transportation
(BTS/USDOT) on O&D travel with that of local area economic and demographic
activities supplied by the Bureau of Economic Analysis of the Department
of Commerce (BEA/DOC), we specify a semi-log linear demand relationship
for O&D travel. The resultant dataset has more than 50,000 observations.
Using a limited information maximum likelihood estimation procedure,
we estimate demand for air travel in 11 market segments within the contiguous
national airspace system (NAS), defined by non-stop distance traveled
between O&D pairs. Our results confirm that local area income and
demographyaffect travel positively for most of the markets. However,
the levels of travel tend to peter out and eventually go down as the
intensity of economic activities increases. We further find that shorter
distance travel tends to be relatively more fareinelastic than that
for longer distances. Average fare tends to affect passenger travel
negatively for all distances. Large hubs are important for passenger
travel; so are the higher market share of established airlines and the
presence of Southwest airlines in the O&D market. We then discuss
approaches using our methodology for deriving bottom-up forecasts. These
forecasts have distinct characteristics that make it more useful for
analyzing flow features, such as passenger and aircraft flows within
the NAS, determining and prioritizing infrastructure investment, and
determining workload of Federal Aviation Administration (FAA) personnel
at centers. Results from our forecasts can be easily complemented with
those produced by the terminal area forecasts (TAF) and similar forecasts
derived from top-down approaches.
Publication
Journal of Air Transportation, Vol. 8, No. 2, pp. 19-56, September
2003.
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