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

Chieh-Yu Hsiao*, Mark Hansen

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

38 Scopus citations

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.

Original languageEnglish
Pages (from-to)1112-1125
Number of pages14
JournalTransportation Research Part E: Logistics and Transportation Review
Volume47
Issue number6
DOIs
StatePublished - 1 Jan 2011

Keywords

  • Demand model
  • Instrumental variables
  • Panel data
  • Route choice
  • Value of travel time
  • TRAVEL ITINERARY SHARES
  • AIRPORT CHOICE
  • COMPETITION
  • QUALITY
  • SERVICE

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