| Author: | Wu, Xiangru |
| Title: | Empirical estimation of aviation’s social benefits |
| Advisors: | Wang, Kun (ISE) Fu, Xiaowen (ISE) |
| Degree: | Ph.D. |
| Year: | 2025 |
| Department: | Department of Industrial and Systems Engineering |
| Pages: | xii, 232 pages : color illustrations |
| Language: | English |
| Abstract: | Air transport has long been acknowledged as a critical driver for social and economic development, improving connectivity and accessibility across regions and nations. While its contributions to economic growth and employment have been extensively studied by economists, this thesis broadens the scope by examining two benefits of air transport: its role in promoting bilateral service trade at the national level and its impact on reducing firm-level emissions at the city level. Additionally, this thesis explores the performance of the aviation system during unprecedented disruptions, such as the COVID-19 pandemic. The thesis is organized into three core chapters, each focusing on a distinct aspect of air transport's social benefits. Chapter 2 examines the aviation sector during crises, specifically analyzing the impacts of the COVID-19 pandemic on airline route choices and the operations of multi-airport systems (MASs). Focusing on the Chinese domestic market, study 1 empirically assesses the pandemic's effects on airlines' route service choices and market interactions from 2019 to 2022. Study 1 estimates an airline route choice model for both full-service carriers (FSCs) and Spring Airlines, China's largest low-cost carrier (LCC). The findings indicate that Spring Airlines has actively expanded its network to all types of routes, particularly those connecting major airports. FSCs also adjusted their route entry strategy by entering more thin routes connected to secondary cities. The pandemic has broken the equilibrium of network differentiation between FSCs and Spring Airlines in China. Spring Airlines has begun expanding services at FSCs' major hub airports. FSCs have also tried to serve more lucrative niche routes that were previously monopolized by Spring Airlines. This thesis also explores the impacts of the pandemic on MASs worldwide, providing insights into the adaptability of MAS structures during a global crisis. Analyzing airline schedule data for 53 sample MASs, study 2 examines three dimensions of MAS structures before and during the late stages of the pandemic: (i) traffic and degree centrality distribution, (ii) intra-MAS airport competition, and (iii) airline competition intensity. The empirical findings reveal that MAS structures in Europe and the United States remained relatively stable during the pandemic, largely due to earlier lifting of air travel bans and a return to pre-pandemic levels in domestic and international markets. In contrast, Asia-Pacific MASs experienced significant changes due to restrictive travel bans, resulting in a more balanced intra-MAS airport traffic distribution, intensified competition, and increased airline concentration levels. These insights underscore the resilience and adaptability of aviation systems during global crises and provide valuable lessons for policymakers and industry stakeholders. Chapter 3 shifts the focus to the economic benefits of air transport, specifically its role in facilitating bilateral service trade. Using China's annual service trade and air connectivity data with 45 partner countries from 2005 to 2018, study 3 develops a reduced-form gravity-type model and employs an instrumental variable (IV) approach to address endogeneity concerns. This study measures country air connectivity through two key metrics: the number of direct route connections and the average seat capacity per route. The findings indicate that (a) increasing the number of direct routes can significantly promote bilateral service export and import trades; (b) the average route-level traffic density has only marginal positive effects; (c) improving air connectivity would enlarge China's overall service trade deficit, because the transport and travel services imports are promoted more than their exports; and (d) the commercial service exports can be stimulated more than the imports, making China achieve a larger commercial service trade surplus by improving bilateral air connectivity. These results highlight the nuanced effects of air connectivity on different service trade sectors and underscore its importance in fostering a post-industrial economy. Building on these findings, Chapter 3 also investigates the impact of Open Skies Air Services Agreements (OSAs) on bilateral service trade, with a focus on the United States, the most proactive country in signing OSAs. Using US service trade data from 2005 to 2019, study 4 applies a difference-in-differences (DID) regression model and an IV approach to mitigate endogeneity. The analysis demonstrates that OSAs significantly boost transport and travel service exports and imports. However, while OSAs enhance U.S. service imports, their impact on commercial service exports is statistically insignificant. Study 4 also identifies significant lead and lag effects of OSAs on service trade, emphasizing their long-term benefits. These findings underscore the transformative role of liberalized air service agreements in promoting service trade and fostering international economic integration. Chapter 4 explores the environmental benefits of air transport by examining its impact on manufacturing firm emissions. This chapter studies the causal relationship between air connectivity and manufacturing firm emissions in China by matching firm data with city aviation development data from 2005 to 2013. The study focuses on sulfur dioxide (SO2) emissions, which have significant adverse health effects on the human respiratory, cardiovascular, and nervous systems and contribute to nonaccidental death. An air connectivity index is constructed to show how well each city is connected to the aviation network. Using instrumental variable methods, study 5 finds that a 1% increase in city air connectivity leads to a 0.1% decrease in SO2 emissions from manufacturing firms. This reduction is facilitated by a more accessible aviation network and more frequent interactions of business travelers. Specifically, the reduction is driven by technological advancements in the production and emission control processes due to increased firm green production efficiency and increased patent applications of manufacturing firms, and the growth of the scientific research and technical service industry in the city. This study also uses these estimates to quantify the deaths prevented and years of life saved by the improved air quality caused by enhanced air connectivity. Robustness checks confirm that these findings remain consistent when examining alternative pollutants and different sample specifications. These results highlight the potential public health gains achievable by enhancing air connectivity. This thesis illustrates the crucial role of air transport in fostering economic growth by enhancing service trade and promoting environmental sustainability through the reduction of firm-level emissions. It also examines the operational strategies of airlines and airports during crises. The findings provide valuable insights for policymakers, highlighting the significance of strategic investments in air connectivity, liberalized air service agreements, and sustainable practices. These measures are essential to fully leverage aviation as a tool for economic development and environmental protection. |
| Rights: | All rights reserved |
| Access: | open access |
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