Estimation of Domestic Air Travel Demand Function in Iran

Expansion of transportation as an infrastructural sector is influenced by the improvement of technology, growth and development. This expansion leads to further economic development by providing improved, increased and easier access to the inputs and financial resources of other zones. For identification of factors affecting the quantity of demand for air travel, which is one of the most important subsectors of passenger transportation, a gravity type model is created using panel data, consisting of 21 of Tehran’s one-head province-pairs during 1379-85.Real air fares, real bus fares, real per capita income, population and distance are considered as the effective factors in the model. The findings indicate that all of these are significant at the 95% confidence level, except real bus fares. Air travel is classed as normal goods, and demand is inelastic with respect to real air fares and distance, and elastic with respect to population.