THE MEASUREMENT OF THE RELATIONSHIP BETWEEN THE CIVIL AVIATION SECTOR AND ECONOMIC GROWTH THROUGH CO-INTEGRATION AND CAUSALITY ANALYSIS

Abstract

Civil aviation services have become serious demand generating tools for all geographic locations. Understanding the economic conditions which make this demand increase possible, knowledge on external benefits and costs of the growth of international aviation sector plays critical role for the companies and countries which are keen on being competitive and economic growth. Improvements in aviation sector create base for analysing the legal context of air transport deeper and therefore companies in aviation sector analyse the market behaviour and take their position accordingly. Liberalisation of the aviation sector is another factor which triggers the demand increase. Liberalisation of the aviation sector in Turkey dates back to 2003. Since then with the help of increasing competition and decreasing costs together with increasing gross domestic product per capita gave rise to incrase in number of passengers. Domestic and international passengers carried in 2000 was approximately 35 million in Turkey however this number is almost increased to 174 milllion by the end of 2016. Therefore this study is aimed to investigate the underlying dynamics of that rapid increase and 1960-2016 annual data of number of passangers carrried both domestic and internationally together with gross domestic product. Within the scope of econometric analysis, stagnation of data is tested through ADF (Augmented Dickey-Fuller) unit root test. Variables are investigated whether they are cointegrated with Granger method and it is found that variables are cointegrated and long-run balanced relationship found between each other. After conducting Granger causality analysis it is found that there is a bi-directional causality relationship exist from gross domestic product per capita to number of passengers carried. Morever through regression analysis it is found that 1 dollar increase in gross domestic product per capita results 11873 increase in number of passengers carried with %5 significance level.