Understanding the Pandenomics: Indian Aviation Industry and Its Uncertainty Absorption

Abstract

This study seeks to identify the role of pandemics upon the Indian aviation industry. The main objectives of this study are threefold: First, to measure the impact of hotel sector upon the aviation market outcome of India post 2005: Second, to measure the impact of human fatality from the communicable diseases upon the Indian aviation market: Third, is to test the impact of economic uncertainty and pandemic uncertainty upon the Indian aviation market. This study has adopted the linear regression model in which total aviation market outcome is estimated as the function of movements of people in airlines, hotel industry cost and uncertainties. We utilise the quantile regression model to see the effects of various factors upon the aviation market at different quantiles. In order to study the cointegrating relation, we utilise Johansen Cointegration test. Further, we employ robustness techniques through FMOLS and DOLS to confirm our earlier findings. Results suggest that fatalities from communicable diseases have exerted negative impacts upon the Indian aviation market. Furthermore, we notice that increasing hotel cost volatility and rising uncertainty in hotel sector have impacted positively and negatively the aviation market, respectively. We also discover that economic uncertainty has impacted the aviation market more than pandemic uncertainty. JEL Codes: G10, G11, G14