Econometric models:

Econometric model is a mathematical representation of air traffic or its constituent parts and those
independent variables of national economy which are thought to influence the traffic growth.
Econometrics is a statistical technique used to quantify the above models.

Models mainly use macroeconomic indicators as their explanatory variables. Most commonly used
factors are GDP, CPI, fuel prices and yield.

Factors for econometric models are GDP, GDP Growth rate, GDP Percapita income, Inflation GDP
Deflator, Exchange rate fluctuations, Population (15 yrs to 64yrs), fuel prices, CPI( Consumer price
index).

Model -1
Paxt+1 = β Paxt + (1–β) PPaxt
Where Paxt+1 = Forecast of next year’s passengers

Pax t = Actual value for current passengers

β = Smoothing constant

PPax t = Forecast value of current period’s passengers

Log Paxt = φ0 + φ1Log Real GDP (–1) – φ2Log Real Yield + D1973 + Εt
Where Pax(t+1) = Next year’s passenger levels

D1973 = Dummy variable, 1993 = 1 (Persian Gulf War), 0 otherwise,

φ1 = Income elasticity, φ2 = Price elasticity, and Εt = Error term

Y = b0 + b1GDP + b2AT Final model equation.

Model-2: (Morocco)

Q = Aexp(bF 2 )Nβ [(Q +Y )/ S]α

Where Q represents the origin/destination demand,

Y passengers in transit,
N flight frequencies,

(Q + Y) / S is load factor and

S is the average size of aircraft (the number of seats).

Results of this model says that the air travel is positively related to frequency of flights and negatively
related to load factor.

Above are the variables used for the prediction.

Model 3:
Mathematical model:
DOMPAX = α + β1(CPI%) + β2(BDC%) + β3(GDP%)
Econometric model:
DOMPAX = α + β1(CPI%) + β2(BDC%) + β3(GDP%) + Ui, where
DOMPAX = Domestic Passenger Traffic (Dependent variable),
CPI% = Percentage change in Consumer Price Index or Inflation,
BDC% = Percentage change in Exchange rate Bureau de Change,
GDP% = Percentage change in Gross Domestic Product,
CPI%, BDC% and GDP% are independent variables.
α = Intercept.
β1, β2, β3= Parameters.
Ui = Stochastic disturbance term or unexplained variables or error term which captures other economic
indicators influencing domestic air travel demand in Nigeria.

The above is a General regression model.

Model 4: