Air cargo demand in Africa: Application of cointegration and error correction modelling techniques

Abstract

This paper examines the short- and long-run impacts of real income, merchandise exports, foreign direct investment, real interest rate and jet fuel prices on air cargo demand in four African countries for the period 1980–2019. Annual data on all the variables were analyzed using cointegration and error-correction modelling techniques. Empirical results reveal long-run equilibrium relationship among the variables. The impact of the variables on air cargo demand vary across the countries. Gross domestic product per capita is a major determinant of air cargo demand in Egypt, Nigeria and South Africa in the short and long term. Real income positively influenced air cargo demand in these countries. For Kenya, real interest rate has positive long-run effect on air cargo demand. Implementation of measures that will enhance economic development, trade and improve airport infrastructure are necessary.