Graduation Year

2017

Date of Submission

4-2017

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Darren Filson

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© 2017 Yuexi Li

Abstract

As one of the most important economic sectors, the air-traveling industry was severely affected by the 2007 to 2008 financial crisis. However, the crisis did not affect entities (airports and airlines) with different market shares of passenger traffic equally. This paper implements regression models to explore key determinants of how the market shares of large entities evolve to get a better understanding of the allocation of air passenger traffic in multi-airport regions, both in the short and long-run post crisis (2009- 2015). Results from this paper show that the pre-crisis share and the traffic change on the set of routes being considered have significant effects on the change of share for large airport and airline entities in multi-airport regions. The large entities’ normalized change in share is higher if the pre-crisis share is higher an/or if total traffic fasslWe also find that low-cost carrier (LCC) large airlines gain more from the crisis than non-LCC airlines, and large airports from regions that have more than two airports have larger changes in market shares during and post crisis. In evaluating the long-term persistence of effects from the demand shock in the market, we observe that explanatory variables for airports tend to have lasting effects on the shares of large airports.

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