Air Freight Economic Factors of Demand in Egypt

Abstract

In Egypt international freight relies mainly on maritime transport, which requires studying of main economic factors of air freight for its enhancement. The paper investigates main economic factors of air freight in Egypt, during the period 1982 till 2019. The paper is investigating the interaction between short and long run variables using VECM "Vector error correction model". The analysis found long run equilibrium relationship among model variables. Short run dynamics found that exports and GDP are positively significant, while inflation and exchange rate are negatively significant to air freight which goes with economic literature. Further analysis of dynamics among studied variables carried using IRF "Impulse Response Function" finding same results of VECM. Variance decomposition carried which found that the highest contribution to air freight changes is exchange rate and exports followed by inflation and the weakest is GDP. The findings contribute to literature of air freight demand.