Macroeconomic Determinants Of Demand For Air Cargo Transport; The Case Of Ethiopian Airlines

Abstract

Analyzing air cargo market is an integral part of air transport industry and form part of corporate planning process. This paper seeks to assess the macroeconomic determinants of air cargo demand by Ethiopian airlines. The vector error correction model with the aid of stata14software package methodology used involved collection of data for international cargo movements in Ethiopia for the period 1980– 2022 to determine the pattern of air cargo transport demand which measured by Available tone Kilometer. Secondary data collected from different sources including World Bank (WB), National Bank of Ethiopia (NBE) data on macroeconomic variables considered to affect demand for air cargo transport were also collected. Multiple regression method was then used to develop models of demand in respect of air cargo movement. An attempt was made to develop models for international air cargo demand in the country with different combinations of explanatory variables utilizing a stepwise regression technique. The model, which has the real gross domestic product, foreign exchange rate, foreign trade volume and foreign direct investments as the explanatory variables, is the most appropriate model to represent the demand for air cargotransportinEthiopia.