Global Air Transport Connectivity: Theory, Measurement and Economic Impacts

Abstract

This dissertation contributes to a better theoretical and empirical understanding of air passenger connectivity and its impact by (1) defining several types of market access, (2) outlining spatially explicit mechanisms following improved market access and (3) quantifying the employment impact of improved air market access in Europe. In recent decades, advancements in telecommunications and (air) transportation have driven globalisation processes. Consequently, policymakers and scholars view access to transportation as an essential prerequisite for economic development. This dissertation defines two types of market access (accessibility and connectivity) by considering the link between transfer costs and geography. This distinction helps to understand the challenges and opportunities for regional policymaking aimed at improving market access. Following this distinction, this dissertation classifies existing air market access indices and empirically compares air passenger connectivity metrics at the connection-level. This conceptual and quantitative assessment enables to rank air connectivity metrics according to the complexity and the attributes that can be considered when using these metrics in applied work. Previous empirical studies have attempted to estimate the wider economic impacts of aviation from regional, country-level and global perspectives. However, no theoretical framework has been presented that comprehensively captures the full set of mechanisms by which aviation can contribute to economic development. Consequently, this dissertation uses a New Economic Geography approach to describe the impact mechanisms and their spatial distribution comprehensively. New Economic Geography models agglomeration forces such as thick markets and distributional forces such as congestion to explain the geographic concentration of economic activity given increasing returns to scale and differential levels of market access. This dissertation then applies this theoretical framework to an empirical study of air transport metrics. While there is ample evidence for the existence of positive wider economic impacts of air transportation, the associated spatial distribution of these impacts has received less attention. This dissertation uses a spatial-econometric approach with instrumental variables on European NUTS-3 level panel data to study the spatial distribution of the impacts of air transport access on service-sector employment. While the spatially resolved approach confirms previous findings that regions close to an airport experience service-sector employment increases due to improved air transport access, this dissertation also finds evidence for the presence of an agglomeration shadow, that is, negative employment effects for regions further away from an airport. The average total impact of connectivity increases on service employment is found to be positive.