Abstract
The thin and fluctuated market generally characterizing air transport to remote islands involves greater business risks for airlines. But air transport often plays an important role in the life and economy of such islands. This paper applies portfolio theory to explore how it can reduce business risks to air transport in this context. The concept of Tourism β is introduced to represent the risk associated with each island market relative to overall tourist demand in the region looking as at 31 airports on remote islands in Japan. The results showed that a well-diversified portfolio of multiple remote islands could reduce the score commercial risks for carriers.
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