Air Passenger Demand Model Apdm Econometric Model For Forecasting Demand In Passenger Air Transports In Nepal

The basic objective of this research paper is to develop an econometric model to estimate demand in passenger air transport measured by the number of passengers carried. The research has been carried out in Nepali context. The initial assumption of this study is that the number of passengers carried in Nepali air transport Y depends on the number of tourist arrivals TA and the gross domestic product GDP. The results are based on statistical methods of regression and correlation analysis. There are several factors affecting air travel demand each factor is composed of elements which can stimulate or constrain air travel growth. For air travel demand analysis purpose these factors are more conveniently classified into two broad groups those external to the airline industry and those within the industry itself. The external environment includes those factors which are outside the control of the individual airline and even the entire airline industry. These are basically long range economic social demographic and political trends for example the age and income distribution of its population its ethnic and cultural ties to other nations. Similarly short-term conditions such as inflation interest rate and currency exchange rates can have a strong effect on the growth potential of both individual airlines and the total industry. The obtained insights could help airlines and managers of all airports in Nepal. Usually the air travel demand will be sensitive to ticket fare and passengers income. GDP is the one that is directly proportional to air passenger demand if GDP is increase people can travel aboard and air demand will increase. Similarly if GDP of the country increase because of good infrastructure tourist arrival will also increase. From this research model any countries passenger demand can be easily find out after knowing the GDP of that country. Hence this model is valuable tool for everyone who wants to do economic analysis of his country.