ESTIMATING THE WIDER ECONOMIC BENEFITS OF AIR TRANSPORT

In addition to the direct, indirect, and induced impact of air transport there are wider economic benefits, also referred to as catalytic impact. Surveys provide data on direct effects. Input-output analysis has been used by a multitude of studies to estimate indirect and induced impact. In contrast, quantifying the wider economic benefits beyond this multiplier impact is considered a difficult task. Obviously, one of the key economic benefits from the transport of passengers and freight by air is consumer surplus, i.e. the difference between the consumer's willingness to pay and the actual airfare and freight rate respectively. In theory, consumer surplus is a convincing monetary measure of the welfare that passengers and shippers gain from air transport. However, a practicable method for implementation is needed. The paper proposes the use of average price elasticities of air transport demand to estimate consumer surplus. The approach also requires the specification of average prices and sales volumes in the air transport markets under consideration.