Flying to Paradise: The Role of Airlift in the Caribbean Tourism Industry

By Sebastian Acevedo Mejia, Lu Han, Marie S Kim, Nicole Laframboise

February 23, 2016

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Sebastian Acevedo Mejia, Lu Han, Marie S Kim, and Nicole Laframboise. Flying to Paradise: The Role of Airlift in the Caribbean Tourism Industry, (USA: International Monetary Fund, 2016) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper studies the role of airlift supply on the tourism sector in the Caribbean. The paper examines the relative importance of U.S.-Caribbean airlift supply factors such as the number of flights, seats, airlines, and departure cities on U.S. tourist arrivals. The possible endogeneity problem between airlift supply and tourist arrivals is addressed by using a structural panel VAR and individual country VARs. Among the four airlift supply measures, increasing the number of flights is found to be the most effective way to boost tourist arrivals on a sustained basis. As a case study, the possible crowding effect of increasing the number of U.S. flights to Cuba is investigated and, based on past observations, we find no significant impact on flights to other Caribbean countries. The impact of natural disasters on airlift supply and tourist arrivals is also quantified.

Subject: Econometric analysis, Economic sectors, Environment, Labor, National accounts, Natural disasters, Structural vector autoregression, Tourism, Transportation, Unemployment rate

Keywords: Airlift availability, Airlift supply data, Airlift supply factor, Airlift supply factors, Airline industry, Caribbean, Market concentration, Natural disasters, Structural vector autoregression, Supply variable, Tourism, Tourism industry, Tourist, Tourist arrival, Transportation, Unemployment rate, WP

Publication Details

Pages:

42
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/033
Stock No:

WPIEA2016033
ISBN:

9781498375108
ISSN:

1018-5941

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