Files
Abstract
The primary purpose of this study is to analyze air carriers’ behavior in capturing market share
by examining the economic factors affecting passenger behavior toward air travel. This study also
examines non-economic factors such as seasonality, unexpected events (9/11 attack), mergers, and
trends. Because the airlines included in this study compete with each other, seemingly unrelated
regression estimation (SURE) is used to estimate the parameters of the demand models which have
correlated error terms. The economic and statistical relationship of the factors with air passenger
miles provides valuable information to understand the nature of the demand for the U.S. air
passenger industry. In examining demand determinants, this study concludes that air fare, income,
seasonality, and mergers play significant roles in determining the demand for air passengers.