Accommodating spatio-temporal dependency in airline demand modeling

The objective of the current study is to examine monthly air passenger departures at the airport level considering spatial interactions between airports. In this study, we develop a novel spatial grouped generalized ordered probit (SGGOP) model system of monthly air passenger departures at the airport level. Specifically, we estimate two variants of spatial models including spatial lag model and spatial error model. In the presence of repeated demand measures for the airports, we also consider temporal variations of spatial correlation effects among proximally located airports by employing space and time-based weight matrix. The proposed model is estimated using monthly air passenger departures for five years for 369 airports across the US. The proposed spatial model is implemented using composite marginal likelihood (CML) approach that offers a computationally feasible framework. From the estimation results, it is evident that air passenger departures at the airport level are influenced by different factors including MSA specific demographic characteristics, built environment characteristics, airport specific factors, spatial factors, and temporal factors. Moreover, spatial autocorrelation parameter is found to be significant validating our hypothesis of the presence of common unobserved factors associated with the spatial unit of analysis. In this study, we also perform a validation analysis to examine the predictive performance of the proposed spatial models. The results highlight the superiority of spatial error model compared to spatial lag model and the independent model that ignores the spatial interactions. Finally, we undertake an elasticity analysis to quantify the impact of the independent variables.