Dynamic relationship between air transport demand and economic growth in the United States: A new look

• We examine the dynamic impacts of economic growth on US airline industry.
• In the long-run, air passenger and freight services increase with economic growth.
• Only air passenger service is responsive to economic growth in the short-run.
• The 9/11 terrorist attacks have short- and long-run effects on passenger demand.

This paper examines the short- and long-run effects of economic growth and market shocks (e.g., 9/11 terrorist attacks, Iraq war, SARS epidemic, and 2008 financial crisis) on air passenger and freight services using an autoregressive distributed lag (ARDL) approach to cointegration. Results show that, in the long-run, both air passenger and freight services tend to increase with economic growth. In the short-run, however, only air passenger service is responsive to economic growth. Finally, only the 9/11 terrorist attacks and the SARS have detrimental effects on air passenger demand both in the short- and long-run, and in the long-run, respectively. However, these market shocks are found to have little impact on air freight demand.