Get Ready for Take-Off: A Two-Stage Model of Aircraft Market Diffusion

FCN Working Paper No. 15/2019

29 Pages Posted: 2 Feb 2020

See all articles by Xueying Liu

Xueying Liu

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN)

Reinhard Madlener

RWTH Aachen University

Date Written: October 1, 2019

Abstract

Over the past decades, the aviation sector has seen an unprecedented technology advancement as well as rise in global air traffic. In this paper, we establish a two-stage model, combining an epidemic diffusion model and a regression analysis to analyze and predict the diffusion process of modern commercial aviation aircraft models before they are launched into the market. For the estimation of the first-stage epidemic diffusion model, a total of 19,768 delivery records covering 52 widely used aircraft models are used and a non-linear least squares method is applied. For the second-stage regression analysis, we collect aircraft specific technical parameters including range, maximum take-off weight and emissions. We find that, at present, pollutant emissions are not of key significance in determining the success of market diffusion of aircraft models, while conventional parameters, such as range, takeoff weight, and bypass ratio of the engine, are comparably more significant. In terms of projection into the future, our model is relatively good at predicting the rate of diffusion but less so at predicting the market size. This naturally points to further research avenues in terms of the prediction of market potentials.

Keywords: Transportation economics, Technological diffusion, Epidemic Diffusion Model, Aircraft

JEL Classification: C32, L93, O33, Q53, Q55, R41

Suggested Citation

Liu, Xueying and Madlener, Reinhard, Get Ready for Take-Off: A Two-Stage Model of Aircraft Market Diffusion (October 1, 2019). FCN Working Paper No. 15/2019. Available at SSRN: https://ssrn.com/abstract=3515415 or http://dx.doi.org/10.2139/ssrn.3515415

Xueying Liu (Contact Author)

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN) ( email )

Mathieustrasse 6
Aachen, 52074
Germany

HOME PAGE: http://https://www.fcn.eonerc.rwth-aachen.de

Reinhard Madlener

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustra├če 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

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