Macroeconomic Determinants of Air Passenger Demand in Türkiye: Evidence from ARDL and Nonlinear ARDL Models
by HAVADER Editör Ekibi
When news of a price hike hits, travel is often one of the first expenses we cut back on. This study tests that intuitive observation scientifically, using years of data on Türkiye's air passenger demand.
The goal was to examine the macroeconomic determinants of air passenger demand in Türkiye using an annual time-series framework that separates short-run adjustment from long-run relationships. Passengers carried by Turkish air carriers served as the dependent variable, with GDP, inflation, and the exchange rate as explanatory factors. The study used a baseline ARDL model alongside a nonlinear ARDL (NARDL) extension that decomposes exchange-rate movements into positive and negative parts to test for possible asymmetric effects.
The results show strong persistence in passenger demand and a positive long-run relationship with macroeconomic activity — as the economy grows, so does flight demand. Inflation was clearly shown to dampen demand, reflecting affordability and macro-stability channels. The exchange-rate channel proved economically relevant but theoretically ambiguous: while the asymmetric model suggested currency appreciations and depreciations could have different long-run effects, no statistically decisive evidence of that asymmetry was found.
What this study contributes is showing that simple, intuitive assumptions like "the exchange rate rose, so flight demand will react this way" aren't as clear-cut as they seem. An everyday analogy: it's similar to a family shaping its vacation plans not around a single exchange-rate move, but around a combination of factors — overall economic confidence, inflation expectations, and real changes in their income. A single indicator doesn't explain the whole decision.
In the end, this research shows that aviation demand planning and policy decisions should rest on dynamic adjustment processes and macro-stability policies, not static trend extrapolation — requiring airlines and policymakers alike to plan with more flexibility against economic fluctuations.
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The goal was to examine the macroeconomic determinants of air passenger demand in Türkiye using an annual time-series framework that separates short-run adjustment from long-run relationships. Passengers carried by Turkish air carriers served as the dependent variable, with GDP, inflation, and the exchange rate as explanatory factors. The study used a baseline ARDL model alongside a nonlinear ARDL (NARDL) extension that decomposes exchange-rate movements into positive and negative parts to test for possible asymmetric effects.
The results show strong persistence in passenger demand and a positive long-run relationship with macroeconomic activity — as the economy grows, so does flight demand. Inflation was clearly shown to dampen demand, reflecting affordability and macro-stability channels. The exchange-rate channel proved economically relevant but theoretically ambiguous: while the asymmetric model suggested currency appreciations and depreciations could have different long-run effects, no statistically decisive evidence of that asymmetry was found.
What this study contributes is showing that simple, intuitive assumptions like "the exchange rate rose, so flight demand will react this way" aren't as clear-cut as they seem. An everyday analogy: it's similar to a family shaping its vacation plans not around a single exchange-rate move, but around a combination of factors — overall economic confidence, inflation expectations, and real changes in their income. A single indicator doesn't explain the whole decision.
In the end, this research shows that aviation demand planning and policy decisions should rest on dynamic adjustment processes and macro-stability policies, not static trend extrapolation — requiring airlines and policymakers alike to plan with more flexibility against economic fluctuations.