Long-Term Macroeconomic Trends and Their Impact on Passenger Air Travel Demand in Pakistan (1970–2024)

Abstract

This study offers a longitudinal appraisal of the macro-level forces that have shaped Pakistan’s passenger-air-travel market over the last half-century. Leveraging an annual data set spanning 1970 – 2024, we estimate an Autoregressive Distributed Lag (ARDL) model to quantify both the short- and long-run elasticities of air-travel demand with respect to real GDP per capita, jet-fuel prices (as a proxy for fare costs), and personal remittance inflows. By extending the temporal horizon well beyond that of earlier Pakistani studies, the analysis captures multiple structural turning points—including the post-9/11 aviation downturn, the 2008–09 oil-price shock, and the COVID-19 pandemic—thereby providing a richer identification of parameter stability. The results reveal a positive and highly significant long-run elasticity for income and remittances, while fuel prices exhibit a dampening, though weaker, influence on demand. These findings contribute to transport-economics scholarship by confirming the relevance of diaspora-driven liquidity effects and by demonstrating the resilience of income–demand linkages even in the presence of repeated external shocks. Policy recommendations focus on integrating demand forecasts into airport-capacity expansion plans, refining fuel-cost hedging strategies, and designing fare incentives that leverage Pakistan’s large overseas workforce.