Mr. Sebastian Acevedo Mejia, Lu Han, Miss Marie S Kim, and Ms. Nicole Laframboise
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.
Sebastian Acevedo, Lu Han, Miss Marie S Kim, Ms. Nicole Laframboise, and Mr. Trevor Serge Coleridge Alleyne
airlines, which would keep ticket prices competitive. Tourists, on the other hand, might place greater value on having nonstop flights to their destination. Alternatively, a minister of tourism in the Caribbean might be more interested in sheer volume, i.e., frequency of flights and number of seats. Or one could simply conclude that all factors are equally important.
This paper seeks to determine the relative importance of different airliftsupplyfactors for U.S tourist arrivals to the Caribbean, namely the number of flights, seats, airlines, and departure cities with
Sebastian Acevedo, Nicole LaFramboise, and Joyce Wong
Figure 3.8. U.S.-Caribbean Flights by Departing Cities and Airlines, 1990–2014
Sources: Air Carrier Financial Reports from United States Department of Transportation; and authors’ calculations.
To identify the effects of the different airliftsupplyfactors on U.S. tourist arrivals to each Caribbean destination, a structural vector autoregression model (SVAR) is used. The SVAR model enables the disentangling of the reverse causality between tourist arrivals and airlift factors in which tourist arrivals are not only