The impact of increasing kerosene prices on air travel demand: Modeling a cause-and-effect chain

摘要

This paper examines the impact of oil depletion transmitted via soaring fuel prices on future air traffic. Using route and carrier specific data the short-term impact of higher fuel prices on airline operating costs, passenger fares and demand for short-haul and long-haul services is analyzed. Results suggest air traffic growth constrained by scarcity of kerosene to be much lower-and may even be negative-than unconstrained air traffic growth. Services offered by low-cost carriers and long-haul services are most adversely affected. Further, a strong increase in fuel prices outweighs the impact of proposed emission trading systems for the aviation industry.