Air transport services in regional Australia: demand pattern, frequency choice and airport entry

Article

Zhang, Yahua, Wang, Kun and Fu, Xiaowen. 2017. "Air transport services in regional Australia: demand pattern, frequency choice and airport entry." Transportation Research Part A: Policy and Practice. 103, pp. 472-489. https://doi.org/10.1016/j.tra.2017.05.028
Article Title

Air transport services in regional Australia: demand pattern, frequency choice and airport entry

ERA Journal ID4298
Article CategoryArticle
AuthorsZhang, Yahua (Author), Wang, Kun (Author) and Fu, Xiaowen (Author)
Journal TitleTransportation Research Part A: Policy and Practice
Journal Citation103, pp. 472-489
Number of Pages18
Year2017
PublisherElsevier
Place of PublicationUnited Kingdom
ISSN0191-2607
0965-8564
Digital Object Identifier (DOI)https://doi.org/10.1016/j.tra.2017.05.028
Abstract

In this study, we investigate the development of the aviation market at Australia’s top 50 regional airports during the 2005–2013 period. Our demand estimation results suggest that a higher commodity price increases the traffic volume in markets where the local economy is heavily reliant on mineral resources and that appreciation of the Australian dollar decreases the passenger flow in tourism-dependent areas. The presence of leading airlines and low-cost carriers and the availability of international services all contribute positively to market growth. Airport entry analysis reveals that the major carriers engage in clear strategic interactions. The Qantas airline group uses Jetstar as a fighting brand, such that Jetstar flies to a destination if and only if the regional airport is also served by Virgin Australia, the group’s major competitor. Unlike the routes connected to major airports, the demand at regional airports is not sensitive to flight frequency. Our empirical results support the introduction of a consistent aviation policy across Australia, especially for issues related to airline competition and demand stimulation. However, special consideration needs to be paid to regional airports to help them deal with economic shocks and cover fixed costs.

Keywordsregional Australia, regional airports, airline entry, flight frequency
ANZSRC Field of Research 2020380117. Transport economics
Public Notes

File reproduced in accordance with the copyright policy of the publisher/author.

Byline AffiliationsSchool of Commerce
University of British Columbia, Canada
University of Sydney
Institution of OriginUniversity of Southern Queensland
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