A study on the change in the significance of GDP as a determinant of air demand - Discussions on brand-new air transport items

Abstract

This study analyzes the Incheon Airport (ICN) case to identify whether GDP affects air traffic volume. Our empirical study obtains the following major findings. From 2001 to 2010, a causal relationship that GDP growth causes an increase in passengers and cargo at ICN, but from 2011 to 2019, a causal relationship that GDP growth causes freight is not verified. On the other hand, from 2011 to 2019, an increase in GDP still led to an increase in passenger traffic at ICN. It suggests that increasing or decreasing GDP may not affect air freight traffic. Previous studies indicate that GDP has been the most important explanatory variable for predicting air traffic. Thus, when determining the capacity of the air cargo infrastructure, the assumption that the air cargo weight increases as GDP increases have been implicitly applied. However, the research findings raise the possibility of modifying such beliefs. This study also focuses on the recent changes in air transport items, verifying the effect of changes in transport items on air freight traffic. The increase in the emerging brand-new transport items, which are not that heavy and have a high proportion of e-commerce transactions, has raised the air transport share compared to sea transport, increasing the number of shipments and diversifying shipment types. On the other hand, a traditional cargo increase, such as communication devices and panel displays, negatively impacts the air transport share. In the future, air freight will grow in the number of B/L (bill of landing) rather than weight. Thus, this study proposes the number of shipments handled per unit hour as a new capacity indicator. How many AWBs (Air waybills) can be processed per hour rather than how many tons can be processed per year can determine the competitiveness of the air freight infrastructure.