Time series analysis of air transportation service quality and travel demand in Japan

The evolution of domestic air travel service in Japan is a product of many factors including airline responses to the changing aviation market, government interventions in terms of regulatory/deregulatory policies, infrastructure investments, and changes in market structure. This paper presents an empirical investigation of the changing quality of passenger airline service and its implications in the domestic aviation market in Japan using qualitative review and a time series analysis of the domestic airline markets from 1986 to 2003. The results show that to meet the ultimate aim of deregulation to increase air passengers’ welfare gain, there is a need to instill measures to correct service imbalance and to create innovative airport demand-capacity management measures.