What is driving the passenger demand on new regional air routes in India: A study using the gravity model

Abstract

Are there unique determinants of air travel demand for regional routes? Is the passenger mix different for airlines flying these routes in developing countries? This paper attempts to answer these questions through a gravity model that identifies significant factors influencing demand for air travel on new routes connecting regional and remote locations. The data for the analysis is from India, where an ongoing regional connectivity scheme encourages the addition of new air routes to the national network. We estimate a multiple regression model with passenger demand as the response variable. The model tests some new predictors along with the traditional explanatory variables of gravity models. The results show that passengers find the saving in travel time due to the introduction of regional air service most attractive. Rather than the size of the population, the presence of prominent tertiary educational institutions at the origin or destination of a regional route is a more significant determinant of demand. This paper derives policy implications and opens new research questions.