A passenger demand model for air transportation in a hub‐and‐spoke network

A passenger demand model for air transportation in a hub‐and‐spoke network

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Article ID: iaor20117552
Volume: 47
Issue: 6
Start Page Number: 1112
End Page Number: 1125
Publication Date: Nov 2011
Journal: Transportation Research Part E
Authors: ,
Keywords: demand
Abstract:

This paper develops an air passenger model that deals with city‐pair demand generation and demand assignment in a single framework. Using publicly available and regularly collected panel data, the model captures both time series and cross‐sectional variation of air travel demand. The empirical analysis finds that pattern of correlations among alternatives can be described by a three‐level nested logit model. Fare, frequency, flight time, direct routing, on‐time performance, income, and market distance have significantly effects on air demand. Correcting for the problem of endogenous air fares using instrumental variables yields more plausible estimates of price sensitivity and value of time.

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