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The Effect of Levels of Air Service Availability on Inbound tourism demand from Asia to Australia

In: Airline Economics in Asia

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  • Tay T. R. Koo
  • David Tan
  • David Timothy Duval

Abstract

The chapter aims to examine the interrelationships between aviation and Asian inbound tourism demand to Australia. First, the chapter introduces key factors in the economics of tourism demand and the empirical work in assessing the aviation–tourism demand relations. Based on 2005–2016 annual time series data across 12 of Australia’s main Asian markets, a dynamic panel regression model is applied to empirically examine the factors influencing tourism demand including exchange rates and disposable income. Using a generalized method of moments approach, the study accounts for the endogenous relations between levels of international air services availability (proxied by seat capacity) and tourism demand. The results suggest, on average, the generative effect of aviation exists albeit with small magnitude (0.1–0.5% increase in tourism demand per 100,000 additional seat capacity). The chapter concludes with a discussion on the shifting inbound tourism balance toward Asia and the implications for aviation policy to meet the high Asian tourism growth targets.

Suggested Citation

  • Tay T. R. Koo & David Tan & David Timothy Duval, 2018. "The Effect of Levels of Air Service Availability on Inbound tourism demand from Asia to Australia," Advances in Airline Economics, in: Airline Economics in Asia, volume 7, pages 145-167, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:aiaezz:s2212-160920180000007009
    DOI: 10.1108/S2212-160920180000007009
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    Cited by:

    1. Maung, Yun Shwe Yee & Douglas, Ian & Tan, David, 2022. "Identifying the drivers of profitable airline growth," Transport Policy, Elsevier, vol. 115(C), pages 275-285.

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    More about this item

    Keywords

    Aviation; tourism demand; seat capacity; endogeneity; dynamic panel GMM; L93; Z38;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • Z38 - Other Special Topics - - Tourism Economics - - - Policy

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