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
Date Written: October 1, 2019
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
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