Air Transport Demand And Economic Growth In Ethiopia: The Case Of Ethiopian Airlines

Abstract

The general objective of this study is to identify the long run and short run causal relationships between air transport demand (passenger and freight) and Ethiopian economy. This paper also aimed to establish the empirical evidence on short-run dynamics and long-run relationships that have been experienced and expected to exist between Ethiopian economy and air transport demands. The empirical evidence obtained from the causality tests (long run, short run, and Granger Causality) showed that there is unidirectional causality going in a positive direction from air transport development (passenger and freight) to local economic growth. The study also shows impacts of positive changes like bilateral agreements and implementations of open sky policy on air transport demand which have significant implications in economic activities. The empirical findings of the paper have some policy and management implications.