QUANTITATIVE TECHNIQUE 2

Project on Regression Analysis of

world's annual air transport
passenger carried numbers for the
last 50 years.

Presentation by
Pranali Borwankar N20223037
Aakriti Nath N20223001
Soumya Guin N20222055
Rosalin Padhi N20222045
Kanha Panda N20222062 Submitted to -
Saumya Srivastava N20222049 Prof. Arnab Chakraborty
Mudit Singhal N20222061
 Introduction
List of Determinants from
Industry reports and academic
research reports
5 Determinants
CONTENT Graphical Representation
of Determinants
Managerial
Significance Level Of
Significance
Multicollinearity
Trends of Contribution of
countries References
 INTRODUCTION

On a national, regional, and international level, air travel

promotes connection and facilitates integration into the global
economy.

In this study, we examine the impact that many

determinants have had on air travel during the past 50
years.
To understand the variability of data and dependency on each
other through regression and correlation analysis.
 GDP Trade Flow
Distance and Buying
Hub GNI power index
Annual Inflation
LIST OF Import Value Fuel Price
Per Capita Populatio
DETERMINANT Income n Air Fare
Unemployment Service Frequency
S rate Open Sky Policy
Consumer
Price Index
Tourist Flow
 Determinants
It is widely acknowledge that the number of
GDP passengers at airport around the world grows at
a rate of about 1.5 times of the worldwide GDP.

Population As population increases, it is expected to

increase in demand for air transport as well

With fewer planes in the skies, there are

AVERAGE fewer seats to meet the recovery in demand,

PRICE OF which in turn has pushed up fares..

TICKET
 Determinants
Rate of inflation is significant and is more
Inflation variable and highly dependent on the type of
secular trend and time periods used in
regression.

Gross national income (GNI) is defined as gross

GN
domestic product, plus net receipts from abroad
of compensation of employees, property income
and net taxes less subsidies on production.
I
 MANAGERIA
L
INFERENCE
Null Hypothesis :- Determinants are related to the intercept, i.e, GDP,
GNI, Inflation, population, average price of ticket are related to no.
of passengers.

Alternate Hypothesis :- Determinants are not related to the

intercept, i.e, GDP, GNI, Inflation, population, average price of ticket
are related to no. of passengers.
Data Over the
years
R Square value is 0.92 i.e the regression model is 92% reliable
When taken together, the regression line is highly significant as it is
MULTIPLE
less than 0.05 (5%)
For GDP, as the p value is greater than 0.05, there is insufficient evidence REGRESSIO
in the sample to conclude that a non-zero correlation exists.
N
R Square value is 0.87 i.e the regression model is 87% reliable SIMPLE
When taken together, the regression line is highly significant as it is
less than 0.05 (5%) GDP
REGRESSION
For GDP, as the p value is lesser than 0.05, there is sufficient evidence
in the sample to conclude that a non-zero correlation exists. (X1)
R Square value is 0.84 i.e the regression model is 84% reliable SIMPLE
When taken together, the regression line is highly significant as it is
less than 0.05 (5%) POPULATION
REGRESSION
For Population, as the p value is lesser than 0.05, there is sufficient
evidence in the sample to conclude that a non-zero correlation exists. (X2)
R Square value is 0.75 i.e the regression model is 75% reliable SIMPLE REGRESSION
When taken together, the regression line is highly significant as it is
less than 0.05 (5%) AVERAGE PRICE OF
For Population, as the p value is lesser than 0.05, there is sufficient TICKET (X3)
evidence in the sample to conclude that a non-zero correlation exists.
R Square value is 0.24 i.e the regression model is 24% reliable SIMPLE REGRESSION
When taken together, the regression line is highly significant as it is
less than 0.05 (5%) INFLATION (X4)
For Population, as the p value is lesser than 0.05, there is sufficient
evidence in the sample to conclude that a non-zero correlation exists.
R Square value is 0.89 i.e the regression model is 89% reliable SIMPLE
When taken together, the regression line is highly significant as it is
less than 0.05 (5%) GNI
REGRESSION
For Population, as the p value is lesser than 0.05, there is sufficient
evidence in the sample to conclude that a non-zero correlation exists. (X5)
 LEVEL OF
SIGNIFICANCE
When taken individually
Determinants- Very highly significant because P-Value is
under the range of significance level of 5%.
The Significance of Line of regression is very high and equal
to the significance of individual determinant taken.
When taken together
Population, Average price of ticket, Inflation,
GNI are significant because P-Value is under
the range of significance level of 5% whereas,
GDP is not significant as it exceeds the
significance level of 5%.
Line of regression significance is very high.
 MULTICOLLINEARITY
Multicollinearity happens when independent variables in the regression model are highly correlated
to each other. It makes it hard to interpret of model and also creates an overfitting problem. It is a
common assumption that people test before selecting the variables into the regression model.
Yes, Multicollinearity exists as inflation, fuel prices, GNI and population are highly correlated to
each other.
Individually the P-Values of GDP, population, GNI, Average Air fare, inflation and fuel prices were
significant but when taken together, the P-Value of GDP was not significant.
197 Trends of contribution of countries to the world

Due to their consistently high

GNI and GDP, which has been a
substantial contributor to the
annual global air transport
traffic, the United States,
Canada, Japan, Germany,
France, and the United
Kingdom were among the top
nations.
1970-
1975

USA, Japan, and UK were top 3

whereas Canada fall to second
tier because of oil crisis in 1973.
1975-
1980

US, Japan and UK is at top.

There was a significant growth
among Spain, France and
Germany.
1980-
1985

The top 3 were still held by the

US, Japan, and the UK. There
was no notable growth in any
other nation than Germany and
Mexico.
1985-1990

There was a lot of competition

amongst other countries
during this era, but US, Japan
and UK retained the top 3
positions.
1990-1995

The Russian Federation

underwent economic reforms in
1991, including trade
liberalisation and privatisation, as
a result of which Russia was one
of the top 3 contributors at a
time when China and France
were experiencing rapid growth.
1995-2000

US and Japan were on the top

again. From 1995 there was
tremendous growth in the GDP of
China resulting in China being in
top 5 contributing countries in
the Air transport.
2000-2005

The UK exhibited a fall in

contribution as a result of the
government's dramatic
reduction in military spending,
which had an impact on their
economy. China rose to become
the industry's second-largest
contributor.
2005-2010

US, China and Germany were in

the top 3 positions. Brazil entered
as an emerging country and
showed a significant
development in the aviation
sector.
2010-
2015

In India the number of

passengers were growing at the
rate of 16.3 % and this showed
a significant growth in Indian
aviation sector.
2015-
2020

US and China remains the top

contributors in air transport.
India became world’s 3rd largest
civil aviation market and was
amongst top 3 contributors in
the world.
 REFERENC
E
Nisa Seсilmis 1 , Aylin Koс2 - ECONOMIC FACTORS AFFECTING AVIATION DEMAND: PRACTICE OF
EU COUNTRIES
The economic & social benefits of air transport- Air Transport Action Group
https://data.worldbank.org/indicator/IS.AIR.PSGR?type=shaded&view=map&year=1970
https://carijournals.org/journals/index.php/JBSM/article/view/173
https://www.sciencedirect.com/science/article/pii/S0969699714001239
https://www.sciencedirect.com/science/article/pii/S0969699714001239
https://www.ingentaconnect.com/content/lse/jtep/2016/00000050/00000003/art00005
THANK
YOU