Flying to Paradise: The Role of Airlift in the Caribbean Tourism Industry

43 Pages Posted: 28 Mar 2016

See all articles by Sebastian Acevedo Mejia

Sebastian Acevedo Mejia

International Monetary Fund (IMF)

Lu Han

University of Liverpool Management School

Marie Kim

International Monetary Fund (IMF)

N. Laframboise

International Monetary Fund (IMF)

Date Written: February 2016

Abstract

This paper studies the role of airlift supply on the tourism sector in the Caribbean. The paper examines the relative importance of U.S.-Caribbean airlift supply factors such as the number of flights, seats, airlines, and departure cities on U.S. tourist arrivals. The possible endogeneity problem between airlift supply and tourist arrivals is addressed by using a structural panel VAR and individual country VARs. Among the four airlift supply measures, increasing the number of flights is found to be the most effective way to boost tourist arrivals on a sustained basis. As a case study, the possible crowding effect of increasing the number of U.S. flights to Cuba is investigated and, based on past observations, we find no significant impact on flights to other Caribbean countries. The impact of natural disasters on airlift supply and tourist arrivals is also quantified.

Keywords: airlift supply factors, tourist, tourist arrivals, airlines, tourists, Time-Series Models, Models with Panel Data,

JEL Classification: C32, C33, L83, N16, O54

Suggested Citation

Acevedo Mejia, Sebastian and Han, Lu and Kim, Marie and Laframboise, N., Flying to Paradise: The Role of Airlift in the Caribbean Tourism Industry (February 2016). IMF Working Paper No. 16/33, Available at SSRN: https://ssrn.com/abstract=2754938

Sebastian Acevedo Mejia (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Lu Han

University of Liverpool Management School ( email )

HOME PAGE: http://https://luhan.io

Marie Kim

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

N. Laframboise

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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