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Air Demand in a Dynamic Competitive Context with the Automobile (2019)

Chapter: Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip

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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
×
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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
×
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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
×
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Suggested Citation:"Chapter 3 - Factors That Influence the Choice of Mode for the Long-Distance Trip." National Academies of Sciences, Engineering, and Medicine. 2019. Air Demand in a Dynamic Competitive Context with the Automobile. Washington, DC: The National Academies Press. doi: 10.17226/25448.
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35 Introduction This chapter presents some important findings about how Americans make the decision between taking a long-distance trip by air and taking a long-distance trip by car. In fact, the choice of the air mode is relatively rare for most Americans. Calculations presented in Chapter 2 (see Table 2-1) reveal that today the average American citizen takes less than one round trip per year by plane.6 While the rate of air travel is increasing, it is increasing gradually: the number of air trips per capita today is approximately 18% higher than it was in 1995. This represents an incremental growth rate stronger than the growth rate of automobile travel (long-distance and otherwise), which has grown approximately 7% during the same period. This chapter examines the factors that help to explain the choice of whether to use a car or take an airplane for trips longer than 200 miles. The central role of trip distance was estab- lished in Chapter 2, which demonstrated that an increase in trip distance is associated with a decrease in travel by car. This chapter builds on that central relationship and examines the interrelationship between trip distance and the following: • Trip cost • Trip purpose • Trip party size • Traveler income • Perceived need for an automobile at the destination end of the trip This chapter reviews many other factors (e.g., age and gender) using the same analytical format (i.e., mode share by distance and the candidate factor), but the five factors listed above emerged as the most determinant factors in the analysis. The results of the 2017 survey conducted by the research team suggest that Americans make decisions about longer-distance travel in a utilitarian manner—but that understanding and interpretation of those decisions can benefit from the careful integration with values, preferences, and attitudes toward those trips and toward the places in which they live. The research team constructed an SEM that integrates both “hard” and “soft” factors in the travel decision-making process. Analysis of the output of that model suggests that the decision to travel by air and car is primarily a weighing of the cost of air travel against the unpleasantness of the car’s long travel times. The purpose of this research is to help develop understanding of the trade-offs between car and air in mode choice among different population groups. The research identifies key indicators C H A P T E R 3 Factors That Influence the Choice of Mode for the Long-Distance Trip 6 As shown in Table 2-1, the “average” number of air round trips per year rose from 0.8 trips per person in 1995 to 0.9 trips per person in 2016.

36 Air Demand in a Dynamic Competitive Context with the Automobile of attitudes and behavior by different market segments. It should be noted that this section does not include an analysis of the service characteristics of different airports in the survey. How people respond to options—the way they react to fares, travel times, and preboarding times—is very transferable across sociodemographic groups. The specific service character- istics, such as average business or economy fares, the number and times of direct flights to destinations, and average peak and nonpeak security times, are not similarly transferable. Following this chapter’s examination of factors that influence the choice of mode for a long-distance trip, Chapter 4 highlights the role of the automobile in the selection of the airport of departure, with particular reference to the choice between closer, smaller airports and more distant, better-served, larger airports. Chapter 4 introduces the concept of leakage of markets from smaller airports to larger airports. The All-Important Role of Trip Distance in the Choice Between the Car and the Plane for Long-Distance Trips Trip length is the major variable in the competition between air travel and travel via auto- mobile. Most long-distance travel involves shorter trip lengths—for example, 85% of trips that are more than 100 miles by all modes and purposes are less than 800 miles in distance. Figure 3-1 uses 1995 ATS data to illustrate how the role of air travel increases with a rise in trip distance and, inversely, how the role of automobile decreases with a rise in trip distance. In the 1995 survey, the automobile dominated for trips of less than 600 miles, at which point air travel dominated for longer trip lengths. Automobile mode shares of approximately 20% persist until 1,500 miles, falling to less than 10% only for trips of more than 1,500 miles. Source: Data provided by N. McGuckin, member of the ACRP Project 03-40 research team. Data are based on the 1995 ATS. (POV = personally owned vehicle.) Trip Length Distribuon By Means of Travel Distance (miles) les s t ha n 2 00 20 0- 29 9 30 0- 39 9 40 0- 49 9 50 0- 59 9 60 0- 69 9 70 0- 79 9 80 0- 89 9 90 0- 99 9 1,0 00 -1 ,09 9 1,1 00 -1 ,19 9 1,2 00 -1 ,29 9 1,3 00 -1 ,39 9 1,4 00 -1 ,49 9 1,5 00 + Figure 3-1. Effect of distance on airplane and automobile mode shares, 1995.

Factors That Influence the Choice of Mode for the Long-Distance Trip 37 The Supply Side: How Costs Are Influenced by Distance Costs Experienced for Each Mode A valuable summary of transportation statistics, Passenger Travel Facts and Figures, provides details about long-term travel (BTS 2016). The report includes a summary of the average expenditure on transportation in 2014. According to these statistics, the “average” American spent $370 per year for airline fares. This can be compared with the expenditure of about $8,500 per year to support the privately owned automobile; of this amount, approximately $3,300 (or nearly 40%) was associated with “vehicle purchase,” sometimes called depreciation. The rest of the costs are not associated with “purchase,” and many such costs vary directly by miles traveled. When a possible long-distance trip is considered, significant capital has already been expended to maintain the availability of a private automobile. Passenger Travel Facts and Figures also shows that the cost of owning and operating an automobile in 2014 is virtually the same as it was in 1990, when expressed in constant dollars, but somewhat lower than experienced in 2000 (BTS 2016). Airlines for America reports that the average airfare, after adjustment for inflation, fell from approximately $0.20 per mile in 1995 (the years of the ATS) to slightly less than $0.16 per mile today (including baggage fees) (Thompson 2013). For the four areas in the 2017 survey con- ducted by the research team, the average cost per mile is approximately $0.26, from the data shown in Figure 3-2, which breaks costs down by trip distance category. Based on self-reported costs, survey respondents reported paying approximately $0.10 per mile for the longest trips, which reveals that airlines have a highly competitive product in the longest distance trips. The “average” survey respondent paid $437 for his or her reference air trip flight, and approximately 10% of that cost was attributable to parking costs and baggage fees. The Price of the Air Trip by Distance The price of air travel has a powerful effect on mode choice for long-distance trips, as does the number of hours of driving that would be necessary for the alternative trip by automobile. “Air Trip Cost” in the research team’s work was derived from the survey results as the sum of the reported round-trip airfare, reported per-person parking costs, and reported baggage fees. Source: 2017 ACRP Project 03-40 Survey. $- $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 300-700 700-1100 1100-1500 1500-1900 1900-2300 Above 2300 T ot al p er M ile C os t o f A ir T rip One-Way Trip Distance (miles) Figure 3-2. Air trip costs per mile by trip distance.

38 Air Demand in a Dynamic Competitive Context with the Automobile Importantly, the price per mile paid by the consumer varies substantially by the length of the trip for the four market areas covered in the survey. As trip length increases, the price per mile offered by the airlines becomes more of a bargain for the customer. However, air trips of 700 miles or less in distance (one way) are starkly higher in cost per mile. Figure 3-2 shows how different the short air trip cost is from the others. As might be expected, the costs associated with a business trip are approximately 20% higher than costs associated with a nonbusiness trip. As discussed in subsequent sections, the total cost per person of a round-trip business trip is estimated at $451 while the total cost of the round-trip nonbusiness trip is $377. Over 85% of primarily business trips in the 2017 ACRP Project 03-40 survey were paid for fully or partially by employers. Figure 3-3 illustrates the fully allocated round-trip costs of the air trip versus the car trip with one, two, and four people in the vehicle as a function of trip distance. The overall flatness of the air trip cost curve over distance is noticeable. The “fully allocated” costs of the one-person automobile trip are also noteworthy. The Price of the Automobile Trip by Distance This section explores the implications of the traveler’s interpretation of automobile costs, as opposed to what has been established as fully allocated costs. Specifically, travelers have a much narrower view of the incremental costs of driving a private vehicle for long-distance trips. The combination of gas and tolls are often referenced in the popular literature as “out-of- pocket costs.” However, such costs might represent approximately half of the actual mileage- based costs. The research team first calculated “car trip cost” for a single-party trip, using automobile travel costs from the BTS report on costs, to generate per-mile vehicle costs for all categories that vary by mileage—excluding the cost of purchasing the vehicle.7 To update the data, the $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 300-700 700-1100 1100-1500 1500-1900 1900-2300 Above 2300 R ou nd T rip C os t p er P er so n One-Way Trip Distance (miles) One Person In Car Two in Car Four in Car Air Trip Cost Figure 3-3. Fully allocated round-trip costs by distance for air trips and for car trips with one, two, and four persons in the vehicle (car costs at $0.54 per mile). 7 BTS. Average Cost of Owning and Operating an Automobile (database). Accessed at https://www.bts.gov/content/average- cost-owning-and-operating-automobile

Factors That Influence the Choice of Mode for the Long-Distance Trip 39 research team used a fully allocated cost of $0.54 per mile, which is consistent with the auto- mobile costs for travel expenses allowed by the Internal Revenue Service (IRS). The IRS accepts a similar number for travel cost calculations for income tax purposes. To account for the cost of staying overnight on longer trips, the research team assumed a night with lodging for every 700 miles, based on the analysis of survey data. Approximately 85% of 2-day travelers are taking trips of less than 1,200 miles, which would suggest that 700 miles is a reasonable distance for the first night’s lodging. A brief review of chain motels suggested that $90 would cover one basic room, with taxes and other costs included. Both Figure 3-3 and Figure 3-4 reflect the assumption of no lodging for the first 700 miles, two nights of lodging for 1,500 miles, and three nights of lodging for anything over 1,500 miles. In Figure 3-3, the automobile trip costs for a one-person trip party are divided by two for a two-person trip party, and by four for a four-person trip party, assuming that all trip members could utilize a single motel room. Variable costs include gas at $0.11 per mile, maintenance at $0.05 per mile, and tolls at $0.04 per mile. Concerning the value of depreciation, the AAA calculates that a 5,000 increase in mileage equates to $180 in increased depreciation, or approximately $0.04 per mile (AAA 2015). For the graph shown in Figure 3-4, the research team used a nonfixed cost of $0.23 cents per mile and assumed an average party size of 2.3 persons, derived from the 2017 ACRP survey data. The trade-off shown in Figure 3-4 is largely based on the difference between the per-person cost of the airplane trip (which does not vary by trip party size) and the per-person cost of the car trip, which does vary by trip party size. In addition, an increase in distance has a larger (and more linear) effect on total costs for the car than for the plane. Figure 3-3 shows that for a person traveling alone the air ticket is cheaper than the fully allocated costs of the automobile at any range included in this research—with even the four-person car trip competitive at over 1,000 miles of one-way distance. Reasons to Look at Fully Allocated Costs Policy implications can be inferred when comparing Figure 3-3 and Figure 3-4. If society could implement a cost allocation system that charged all costs on a per-mile basis, then the $- $100 $200 $300 $400 $500 $600 $700 $800 300-700 700-1100 1100-1500 1500-1900 1900-2300 above 2300 R ou nd T rip C os t p er P er so n One-Way Trip Distance (miles) Car Average Party Size Air Trip Cost Figure 3-4. Cost model with nonfixed round-trip car costs at $0.23 per mile.

40 Air Demand in a Dynamic Competitive Context with the Automobile individual traveler would have a greater incentive to choose a more cost-effective mode. Despite difficulties associated with the implementation of such a system, analysts writing about autonomous vehicles often assume that vehicle ownership would be collective and that fees would be solely based on a per-mile basis. Advocates of more efficient transportation also support the concept of encouraging incremental charging by use, rather than accepting the fixed costs of ownership. The growth of programs that encourage people to “share” cars is consistent with a move toward greater emphasis on incremental cost allocation, as a way to minimize non-essential VMT. In addition, comparing Figure 3-3 and Figure 3-4 shows how sensitive the price-estimation process is to assumptions about what costs vary with incremental driving and what costs do not. While Figure 3-4 was created based on research into true nonfixed costs (costs that vary by mileage), extensive reference is made to “gas and tolls” in the literature as the proxy for “out-of-pocket” costs. Using the same base assumptions, such costs would look like 15 cents per mile, instead of the 23 cents used in this chart. The logical implications of the two figures are important. Common use of “out-of-pocket” costs suggests that the cost of driving a mile is 15 cents, when the IRS has established the cost as 54 cents. Thus, the real cost of driving tends to be underestimated in the mind of the traveler. The Demand Side: How Mode Share Is Influenced by Trip Distance in Interaction with Other Factors Trip distance—in interaction with a number of factors—has a profound influence on the mode choice between airplane and automobile. Using data from the 2017 survey conducted under ACRP Project 03-40, this section reviews major factors that interact with trip distance in the explanation of mode choice between air and automobile. Income and Trip Distance In the first analysis, the sample was divided into three income groups (Figure 3-5 shows the difference between the highest and lowest income groups). The curves for both groups reflect the observation that longer distances are associated with lower automobile mode share and Source: 2017 ACRP Project 03-40 Survey. 0% 10% 20% 30% 40% 50% 60% 70% 80% 300-700 700-1100 1100-1500 1500-1900 1900-2300 above 2300 A ut om ob ile M od e S ha re One-Way Trip Distance (miles) Under $75k Over $100k Figure 3-5. Automobile mode share by trip distance for two income groups.

Factors That Influence the Choice of Mode for the Long-Distance Trip 41 higher air mode shares. The higher income curve seems to flatten in the higher distance cate- gories, at which point approximately 10% of travelers continue to choose to travel by car. For trips of the same distance, approximately 20% of the lower-income group chooses to travel by car. At the highest distance lengths, variables other than income and trip length are needed to explain why 10%–20% of travelers remain with automobile. Later sections address the question of who is still choosing the automobile at these distances. Age and Trip Distance As with all demographic subgroups examined, travel by automobile among Millennials decreases as trip distance increases, as shown in Figure 3-6. However, distance seems to play a less dramatic role for the younger group than for the older group since the decline in automobile travel as distance increases is less pronounced for Millennials. Thus, Millennials are less likely than the older group to choose the car for shorter trips but are more likely to choose the car for trips longer than 1,700 miles. The fact that Millennials are less likely to travel by car for shorter trips is consistent with much of the attitudinal data presented in this report and in other recent research; the fact that Millennials have a higher propensity to choose the auto- mobile for the longest trip is worthy of further research. In the sample for this research, 86% of Millennials are working for pay, while only 63% of the older groups are working for pay. Thus, the younger group is more likely to be on a business trip; the modal implications of this are explored in the next section. Trip Purpose and Distance Compared to those traveling for leisure, those traveling on business have a far greater propensity to take an airplane for a shorter-distance trip and a far lower propensity to take an airplane for trips of more than 1,900 miles (see Figure 3-7). Again, for trips up to approximately 1,700 miles, costs associated with the trips can likely explain the pattern. Shorter-distance air- plane tickets cost more per mile (see Figure 3-2) than taking the same trip by car, and someone other than the traveler is paying for this far-faster business mode. However, the automobile seems to play a key role in many long business trips, including trips with multiple destinations (see Figure 3-10 later in this chapter.) Source: 2017 ACRP Project 03-40 Survey. 0% 10% 20% 30% 40% 50% 60% 70% 80% 300-700 700-1100 1100-1500 1500-1900 1900-2300 above 2300 A ut om ob ile M od e S ha re One-Way Trip Distance (miles) Older Groups Millennials Figure 3-6. Effect of trip distance on automobile mode share for two age groups.

42 Air Demand in a Dynamic Competitive Context with the Automobile Travel Party Size and Trip Distance How does travel party size affect mode share at different trip distances? In the 2017 ACR Project 03-40 survey, the average travel party size was 2.3. Figure 3-8 shows the automobile mode share by distance for one or two persons in a travel party (orange, solid line) compared with three or more (blue, dashed line.) For those traveling alone or with one other person, the curve looks familiar, with the longest trips showing an approximately 12% share for the auto- mobile at a trip distance of 2,000 miles. Conversely, among those who traveled with three or more individuals, approximately 30% took the car for trips over 2,000 miles. Need for the Automobile at Trip End and Trip Distance Those who reported that they need the flexibility of a car at the destination of a trip have a significantly higher propensity to choose the car for travel, as shown in Figure 3-9. A minority of the sample reported that they do not need a car or choose it as a mode, even for relatively Source: 2017 ACRP Project 03-40 Survey. 0% 10% 20% 30% 40% 50% 60% 70% 80% 300-700 700-1100 1100-1500 1500-1900 1900-2300 Above 2300 A ut om ob ile M od e S ha re One-Way Trip Distance (miles) Primarily Business Primarily Leisure Figure 3-7. Automobile mode share by trip distance and purpose. Source: 2017 ACRP Project 03-40 Survey. 0% 10% 20% 30% 40% 50% 60% 70% 80% 300-700 700-1100 1100-1500 1500-1900 1900-2300 above 2300 Au to m ob ile M od e Sh ar e One-Way Trip Distance (miles) Three + One or Two Figure 3-8. Automobile mode share by trip distance and travel party size.

Factors That Influence the Choice of Mode for the Long-Distance Trip 43 short-distance trips. Among those who stated that they did not need a car, mode share for car continued to decrease as distance increased, up until a trip distance of approximately 1,700 miles. For trip distances over 1,700 miles, distance ceases to be explanatory, as the residual 10% of the group continued to choose the automobile even with increasing trip distance. Among those who stated that they needed a car, the relationship between trip distance and car mode choice behaves in a more linear manner—car mode share continues to decrease as distance increases. Who Is Taking a Multidestination Trip? Approximately 43% of survey respondents reported going to more than one destination on their reference trip. The reality of several “stops” on the trip has a profound impact on mode choice—42% of the research sample chose to use a car for a single-destination trip, but 63% chose to use a car for a trip with multiple destinations (the average mode share for car was 51%). Figure 3-10 shows automobile mode share by trip distance for travelers with single destinations and travelers with multiple destinations. Travelers with multiple destinations are more likely to be male, young, away for more days, and in a larger travel party—with more household members and more children. In addition, those traveling to multiple destinations are more likely to be to be traveling on business, which suggests that there may be two separate markets for long-distance, multiple-destination trips by car: one based on personal needs and one based on business needs. The propensity for a given trip to have multiple destinations is highest in the shorter-distance trip categories (300 to 700 miles); this connection flattens for the rest of the distance spectrum at approximately one-third of trips (not shown). Who Is Traveling by Car for the Very Longest Trips? In the examination of the explanatory variables, increasing trip distance is associated with decreasing share for the automobile—until approximately 1,700 miles, where the automobile mode share remains near 10%. The price advantage of the car disappears at this trip distance; however, a consistently significant portion of the sample remains with the slower, multi-night automobile trip. Clearly, some travelers continue to choose or need the car for these long-distance Source: 2017 ACRP Project 03-40 Survey. 0% 10% 20% 30% 40% 50% 60% 70% 80% 300-700 700-1100 1100-1500 1500-1900 1900-2300 Above 2300 A ut om ob ile M od e S ha re One-Way Trip Distance (miles) Need Car Don't Need Car Figure 3-9. Automobile mode share by distance—need car vs. don’t need car.

44 Air Demand in a Dynamic Competitive Context with the Automobile trips. For very long-distance trips (over 1,700 miles), compared to air travelers, automobile travelers • Are more likely to be male • Are more likely to be younger • Have less income • Have fewer years of education • Are more likely to be on a business trip • Have more people in the travel party • Have more household members in the travel party • Have more children in the travel party • Report more need for a car at the destination • Are more likely to be on a multidestination trip. The last traveler behavior is important, as nearly 75% of respondents using the car for a trip of more than 1,700 miles were going to multiple destinations. By comparison, less than 25% of air travelers for this trip distance were going to more than one destination. Source: 2017 ACRP Project 03-40 Survey. 0% 10% 20% 30% 40% 50% 60% 70% 80% 300-700 700-1100 1100-1500 1500-1900 1900-2300 above 2300 Au to m ob ile M od e Sh ar e One-Way Trip Distance (miles) Multiple destinations Single destination Figure 3-10. Relationship between number of destinations and mode choice by distance.

Next: Chapter 4 - The Role of the Automobile in the Future of Smaller American Airports: Leakage from Smaller Airports to Larger Ones »
Air Demand in a Dynamic Competitive Context with the Automobile Get This Book
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Future demand for shorter-range airline trips is unstable, affected by changes in technology as well as consumer preferences. Through application of new research tools that support scenario analysis, the TRB Airport Cooperative Research Program's ACRP Research Report 204: Air Demand in a Dynamic Competitive Context with the Automobile explores the potential effects of evolving automobile and aircraft technology and shifting consumer preferences on demand for shorter-range air trips.

While previous methods of demand forecasting have tended to see aviation in a vacuum relative to its key domestic competitor, the automobile, the analytic framework presented in this report facilitates comparison of the two competing modes under changing technology and demographic conditions as well as consumer choice.

The report is designed to help managers of smaller airports develop a better understanding of how consumers choose between flying out of a smaller hometown airport to connect to a flight at a larger airport and taking a longer automobile drive, bypassing the smaller airport, to fly directly from a larger airport.

Also see the accompanying ACRP Web-Only Document 38: Technical Appendix to Air Demand in a Dynamic Competitive Context with the Automobile.

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