Globalization, long-haul flights and inter-city connections

Abstract

We estimate a model that identifies the impact of long-haul non-stop flights on traffic flows in inter-city markets, using data that account for the true origin and destination of passengers. In particular, we analyze whether long-haul non-stop flights mayhave a positive and significant effect on traffic flows in a context where indirect connectivity is high. Furthermore, we examine whether the impact of non-stop flights on traffic is associated to the income levels of the destination. We find that even modest increases of non-stop flights lead to significant traffic gainsbut such traffic gains areonly clearly relevant when the destination city is located in a high-income country.