Gravity models in air transport research: a survey and an application

Edited book (chapter)

Zhang, Yahua, Lin, Faqin and Zhang, Anming. 2018. "Gravity models in air transport research: a survey and an application." Blonigen, Bruce A. and Wilson, Wesley W. (ed.) Handbook of international trade and transportation. Cheltenham, United Kingdom. Edward Elgar Publishing. pp. 141-158
Chapter Title

Gravity models in air transport research: a survey and an application

Book Chapter CategoryEdited book (chapter)
ERA Publisher ID1811
Book TitleHandbook of international trade and transportation
AuthorsZhang, Yahua (Author), Lin, Faqin (Author) and Zhang, Anming (Author)
EditorsBlonigen, Bruce A. and Wilson, Wesley W.
Page Range141-158
Chapter Number4
Number of Pages18
Year2018
PublisherEdward Elgar Publishing
Place of PublicationCheltenham, United Kingdom
ISBN9781785366147
9781785366154
Web Address (URL)https://www.e-elgar.com/shop/handbook-of-international-trade-and-transportation
Abstract

Both trade theories and empirical evidence have provided strong support for the gravity model. However, its applications in air transport research remain relatively sparse. A review of the air transport literature employing gravity models in the last ten years shows that most of the studies have not accounted for the advances in empirical estimation techniques developed in international economics. Studies that compare the magnitudes of the elasticities of income and distance and the sizes of other cost variables between trade and air trasnport literature, and between various estimation approaches, are still lacking. We apply the gravity model in the context of China’s aviation market using the Poisson Pseudo-Maximum Likelihood (PPML) approach with fixed effects. The results indicate an enormous positive effect of the continuous liberalisation in the air transport sector in promoting the demand for air travel. The emergence of high-speed rail (HSR) services has been a serious threat to China’s airline industry and could result in a significant reduction in the number of air passengers when other factors are controlled for. Strategies need to be worked out to cope with the challenges of the HSR services. This research also suggests that the presence of low-cost carriers could increase the bilateral passenger flows by 19%.

KeywordsGravity model; Air transport, PPML; China
ANZSRC Field of Research 2020350901. Air transportation and freight services
380117. Transport economics
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Byline AffiliationsSchool of Commerce
Central University of Finance and Economics, China
University of British Columbia, Canada
Institution of OriginUniversity of Southern Queensland
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