Journal of Air Transport Management

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Journal of Air Transport Management 17 (2011) 175e180

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                                            Journal of Air Transport Management
                                          journal homepage: www.elsevier.com/locate/jairtraman

Effect of air services availability on international visitors to New Zealand
David Timothy Duval a, b, *, Aaron Schiff c
a
  Faculty of Business and Economics, University of Winnipeg, Winnipeg, Manitoba, Canada
b
  School of Business, University of Otago, Dunedin 9014, New Zealand
c
  Covec, 191 Queen Street, Auckland 1010, New Zealand

                                                      a b s t r a c t
Keywords:                                             We examine the effects of discrete changes in the availability of direct air services on the number of
Aviation and tourism                                  international visitor arrivals to New Zealand. We consider five different countries of origin and control
New Zealand aviation
                                                      for GDP and exchange rates. The results are mixed, suggesting that regional hubs and robust third-
Air transport liberalisation
Passenger air travel
                                                      country carriers provide sufficient airlift for many visitors from countries without direct air services to
                                                      New Zealand. We outline the resulting implications for international air services policy.
                                                                                                                       Ó 2010 Elsevier Ltd. All rights reserved.

1. Introduction                                                                               New Zealand is the focus in the paper because of its geographic
                                                                                          position. It is relatively isolated from most major international
    The relationship between tourism and international commercial                         visitor markets except Australia and almost all international visitors
air transport is significant. Air service is often a critical determinant                  to New Zealand arrive by air. This isolation supports a relatively
of the overall performance of a tourism destination. This may be                          liberal approach to air access rights, which has been a stated policy
amplified in geographically remote destinations with limited air                           of the New Zealand Government since 1985. A 1998 policy directive
transport connectivity. It may also be important when certain                             extended this by positioning the country as one which “seeks to
inbound routes and sectors are commercially nonviable.                                    conclude with other countries the most liberal and flexible air
    With a population of only 4.3 million, New Zealand received                           services arrangements possible, providing for freer access for
some 2.4 million international short-term visitor arrivals in 2009                        international airlines and thereby for increased competition among
(Ministry of Tourism, 2009). Their expenditure e at approximately                         them” (Ministry of Transport, 1998).
NZ$9.3 billion (Statistics New Zealand, 2009) e accounted for 16%
of the country’s export earnings. Tourism thus forms a significant                         2. Background
part of New Zealand’s economy. While Air New Zealand offers the
only non-stop or direct services for most key visitor markets (with                           Airlines are a key vector of mobility for tourists. Raguraman
the exceptions of Australia and the United States), 16 other foreign                      (1997) emphasised accessibility as a key element in the develop-
airlines bring visitors from other international markets. For most of                     ment of tourism, and accessibility and connectivity are paramount
these, New Zealand is at the end of a long ‘spoke’ and is not                             for generating tourism export earnings. International air services
necessarily an integral part of their network.                                            are a conduit for actual demand and help convert latent tourism
    This paper examines the effects on international visitor arrivals                     demand into actual demand.
of changes in the availability of direct air services to New Zealand.                         The World Economic Forum’s 2009 assessment of the compet-
We develop models of visitor arrivals that test whether discrete                          itiveness of travel and tourism included various measures of air
changes in service availability had any statistically significant effect                   transport infrastructure. Ach and Pearce (2009) suggest that a lack
on visitor arrivals from various countries of origin after controlling                    of air transport infrastructure can contribute negatively to a region
for GDP and exchange rates. We conclude by raising policy impli-                          or country’s tourism competitiveness. Oxera’s (2009) report for the
cations from our empirical results. In particular, we examine                             UK Airport Operators Association estimated that the aviation sector
whether a policy directive of seeking direct services from all major                      (inclusive of airports, airlines and other providers) accounted for
origin markets is necessary to maintain visitor arrivals.                                 economic output of £8.8 billion and 141,000 jobs in the UK, as part
                                                                                          of wider wealth generators centred around trade, investment and
  * Corresponding author. Faculty of Business and Economics, University of Win-
                                                                                          connectivity.
nipeg, Winnipeg, Manitoba, Canada.                                                            Debate over the economic benefits of air services has intensi-
    E-mail address: dtduval@gmail.com (D.T. Duval).                                       fied recently. There are several reasons for this. First, the global

0969-6997/$ e see front matter Ó 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jairtraman.2010.12.006
176                                       D.T. Duval, A. Schiff / Journal of Air Transport Management 17 (2011) 175e180

recession of 2008/2009 saw significant capacity reductions in many                  Table 1
markets. Second, the increasing attention toward greenhouse gas                    International visitor arrivals to New Zealand (top eight source markets).

emissions from aviation has spawned competing interests in                                             1999 Visitors        Proportiona       2009 Visitors     Proportiona
measuring value. These debates balance the raw economic value of                     Australia           523,428            33%               1,082,680         44%
air services against the cost of negative externalities arising from                 UK                  168,271            10%                 258,438         11%
associated emissions. Finally, the volcanic events of April 2010 in                  US                  180,881            11%                 197,792          8%
                                                                                     China                23,241             1%                 102,259          4%
Iceland served as a reminder to both the tourism and the air
                                                                                     Japan               147,345             9%                  78,426          3%
transport industries that air service operations can be subject to                   Germany              46,243             3%                  64,564          3%
sudden extreme events. Swine flu (2008) and SARS (2004) are other                     South Korea          43,234             3%                  52,921          2%
examples.                                                                            Canada               33,296             2%                  48,656          2%
    The frequency and capacity of air services continue to play                      Total Arrivals    1,607,241                              2,447,346

a critical role in facilitating route and originedestination traffic. Of            Source: New Zealand International Visitor Arrivals (Ministry of Tourism, 2010).
                                                                                     a
interest to the New Zealand market is the proliferation of Austra-                     Proportion of all international visitors.
lian- and Asian-based low-cost (and potentially long-haul) carriers.
Several studies examine the wider value of air services to tourism.                    In 2009, New Zealand received over 2.4 million international
Papatheodorou and Lei (2006), for example, used Britain as a case                  visitor arrivals by air. Visitor origins are shown in Table 1. Arrivals
study to illustrate the impact of three key business models                        from Australia have steadily increased in recent years. International
(scheduled, charter and low-cost) on British regional airports,                    arrivals have been stagnant from most other markets, with the
concluding that the low-cost model has not been solely responsible                 notable exception of China (Table 1). This reflects several realities.
for traffic growth. Graham and Dennis (2010) investigated a deci-                   Geography plays an important role both in securing Australia visi-
sion by the Maltese government to incentivise new low-cost                         tors but also in retarding visitation from more distant markets such
services. They found that new services by Ryanair, easyJet and                     as the UK and Germany. As well, New Zealand as a visitor desti-
Vueling (among others) grew the market beginning in 2007 from                      nation faces significant challenges given the numerous alternative
ports such as Luton, Pisa, and Dublin. Elsewhere, Donzelli’s (2010)                destinations on offer for visitors from Europe and Asia.
work in southern Italy demonstrates that low-cost models have
effectively de-seasonalised arrivals patterns within an overall                    4. Empirical methodology and data
increase in passenger numbers.
    There exists a significant body of work on primarily US-based                       Accessibility and connectivity are integral elements in New
assessments of liberalisation and the effect on passenger traffic. The              Zealand’s international airlift. The absence of air services would
empirical analysis by Clougherty et al. (2001) of country-pair                     thus be cause for concern, although a precise measurement of this
markets involving Canada shows that the Canadian dual-designa-                     has not been undertaken. Given the country’s isolation, we contend
tion policy increased Canadian carrier traffic volume and interna-                  that it should be relatively easy to detect the effect of changes in air
tional visitor numbers. Warnock-Smith and Morrell (2008)                           services on international tourism to New Zealand, compared to
investigated whether liberalisation in the Caribbean has led to                    other destinations where alternative modes of transport (e.g. rail or
increase in passenger traffic. While weighted real GDP exhibited                    sea) are feasible.
a stronger coefficient, their measure of liberalisation (which                          The hypothesis we test is that availability of direct or non-stop
incorporated capacity and frequency, tariffs, fifth freedom rights,                 air service from a foreign country to New Zealand has a positive
carrier designation and the number of permitted access points)                     effect on the number of visitor arrivals from that country, every-
resulted in a traffic volume log increase of between 2.55% and                      thing else equal. As described below, we test various forms of this
3.02%. It is not clear to what extent these changes in visitor                     hypothesis and estimate the effects of changes in air service
numbers were due to increased availability of air services versus                  availability on international visitor arrivals by analysing a number
lower prices due to increased competition on existing routes.                      of examples where there has been a complete gain or loss of direct
Empirical modelling of the New Zealand inbound commercial air                      or non-stop services from specific countries over time. Table 2
transport market is limited currently to the work of Hazledine                     summarises the examples that we have been able to identify over
(2008) on market structure and competition on the trans-Tasman                     the past thirty years.
market.
    As indicated, New Zealand’s geographic position accounts for
                                                                                   Table 2
the country’s liberal policy approach to air access (Armstrong and                 Discrete changes in New Zealand air service availability.
Read, 2006). The intent is to promote economic development,
                                                                                     Country                              Airlines                        Direct or non-stop
which includes international tourism. This somewhat mirrors                                                                                               services available
trends in the wider Asia-Pacific, including Australia (Hodgkinson,
                                                                                     Canada                               Air New Zealand                 Nov 85eFeb 92
2006), India (Hooper, 1998) and more broadly the ASEAN regional                                                                                           Sep 97eNov 98
liberalisation initiative (Forsyth et al., 2006). It also reflects wider                                                                                   Nov 07eCurrent
trends among island states to adopt liberal access approaches to                                                          Canadian Airlines               Nov 85eApr 91
secure access to visitor markets.                                                                                         International                   Oct 97eDec 98
                                                                                     Chile                                LAN Airlines                    Jul 02eCurrent
                                                                                     Mainland China                       Air New Zealand                 Nov 06eCurrent
3. The New Zealand inbound tourism market                                                                                 Air China                       Jul 00eMar 01
                                                                                     Indonesia                            Air New Zealand                 Sep 90eOct 97
   With the exception of the Australian market, New Zealand is                                                            Garuda Indonesia                Nov 85eNov 06
                                                                                     South Korea                          Air New Zealand                 Nov 93eJan 98
largely a long-haul destination. The pattern of international arrivals
                                                                                                                          Korean Air                      Nov 93eCurrent
thus generally relies on access via intermediate points. Major                                                            Asiana Airlines                 Oct 03eMar 05
markets where non-stop services are available include the United                     Taiwan                               Air New Zealand                 Aug 91eMar 06
States, Canada, Japan, China and Korea. From other parts of the                                                           EVA Airways                     Sep 94eAug 08
world, however, international travellers generally transit through                                                        China Airlines                  Mar 00eOct 01
                                                                                     United Arab Emirates                 Emirates                        Aug 03eCurrent
hubs such as Sydney, Hong Kong, Singapore and Los Angeles.
D.T. Duval, A. Schiff / Journal of Air Transport Management 17 (2011) 175e180                                                177

    Our objective in the empirical analysis is to estimate whether the                      Table 3
introduction or loss of air services between New Zealand and                                Canada regression results.

the other countries listed in Table 2 had a significant effect on the                          Variable Holiday Arrivals                      Other Arrivals
number of international visitor arrivals from that country, controlling                                   Model 1      Model 2     Model 3   Model 1    Model 2     Model 3
for other economic factors that may affect the number of arrivals.
                                                                                              Constant     6.62       6.08       6.20    12.86** 13.16*** 13.42***
While potentially important for understanding service choice,                                 GDP           1.26***     1.21**      1.22***   1.71***  1.73***   1.76***
consumer-centred factors, such as prices and the effects of marketing                         ER           0.03       0.08       0.17      0.20     0.24      0.19
were not included in our modelling as reliable data on such variables                         D             0.06                    4.41      0.09*              2.33
                                                                                              GDPxD                     0.01       0.34               0.00     0.18
do not exist. In particular, as we have not controlled for marketing
                                                                                              ERxD                      0.34        0.51              0.20     0.10
effects, our estimates of the effect of the introduction of a new air                         Q2           1.25***    1.25***    1.25*** 0.63*** 0.62*** 0.62***
service on visitor arrivals also incorporate the effects of any adver-                        Q3           1.27***    1.27***    1.28*** 0.63*** 0.63*** 0.63***
tising undertaken by the airline to promote the route.                                        Q4           0.28***    0.28***    0.28*** 0.02     0.01     0.02
    For controlling variables we used measures of real GDP in the                             AR(1)         0.36***     0.36***     0.34***   0.19**   0.19**    0.18**
                                                                                              AR(3)                                           0.28***  0.28***   0.28***
foreign country and the exchange rate between the foreign
                                                                                              AR(4)          0.55***     0.55***    0.55***   0.46***  0.47***   0.46***
currency and the New Zealand dollar. Quarterly seasonally adjusted
real GDP data was obtained for all countries in Table 2 except for                            R 2
                                                                                                            0.95         0.95        0.95      0.94        0.94        0.94
China and the United Arab Emirates, which could not be obtained                               N           124          124         124       124         124         124
and thus these countries were excluded from the analysis. The GDP                           *** Significant at 1% level; ** Significant at 5% level; * Significant at 10% level.
data were obtained from the online Organisation for Economic
Co-operation and Development (OECD) statistics database, except
Taiwan, which were obtained from the National Statistics office of                           Ati;j ¼ a þ bGDPit þ gERti þ dDti þ q1 Q2t þ q2 Q3t þ q3 Q4t þ eti;j                (1)
Taiwan. Quarterly average exchange rates were also obtained and
expressed as units of foreign currency per New Zealand dollar.
Exchange rate data were obtained from the International Financial                           Ati;j ¼ a þ b1 GDPit þ b2 Dti GDPit þ g1 ERti þ g2 Dti ERti þ q1 Q2t
Statistics database of the International Monetary Fund, except for                                    þ q2 Q3t þ q3 Q4t þ eti;j                                                 (2)
Taiwan which were obtained from the PACIFIC exchange rate
service.
    For each origin country, international visitor arrivals to New                          Ati;j ¼ a þ b1 GDPit þ b2 Dti GDPit þ g1 ERti þ g2 Dti ERti þ dDti þ q1 Q2t
Zealand are recorded in the International Visitor Arrivals (IVA)                                    þ q2 Q3t þ q3 Q4t þeti;j                                                    (3)
database of Statistics New Zealand. Monthly arrival counts by origin
and purpose of travel are available from January 1979, and these                               Model 1 allows service availability to shift visitor arrivals by
were converted to quarterly totals to be consistent with the GDP                            a constant amount. Model 2 allows service availability to change
data in our analysis. Arrivals from each country were split into                            the coefficients on the GDP and exchange rate variables so that, for
‘holiday’ and ‘other’ purposes of travel, to facilitate testing whether                     example, the coefficient on GDP is b1. when air service is not
the effects of service availability differ across different purposes of                     available and is b1þb2 when service is available. Model 3 allows for
travel.1 In total we have up to 124 observations for each origin/                           both a shift of the intercept and a change of the coefficients on GDP
purpose combination.2                                                                       and exchange rates. The models were estimated using the natural
    To capture the availability of services, a quarterly dummy vari-                        logarithm of arrivals, GDP and exchange rates, so the coefficients on
able was constructed for each country, taking the value one if direct                       the explanatory variables can be interpreted as elasticities.
services were available on at least one airline for at least two out of                        Given that all our data are time-series, we allowed for the
three months in the quarter, and taking the value zero otherwise.                           possibility of serial correlation by introducing an autoregressive
Visitor arrivals to New Zealand from most countries tend to follow                          error process if necessary. For example, with a first-order autore-
a strong seasonal pattern, with greater visitor numbers in the                              gressive, or AR(1), error process, the residual is modelled as:
summer months. To allow for this, quarterly dummy variables were
also constructed.                                                                           eti;j ¼ ret1    t
                                                                                                      i;j þ 3i;j
    We considered three different ways that service availability may
                                                                                            where 1
178                                               D.T. Duval, A. Schiff / Journal of Air Transport Management 17 (2011) 175e180

the intercept shift for ‘other’ arrivals which is weakly significant at                     Table 5
the 10% level. The coefficient of 0.09 indicates that quarterly ‘other’                     Indonesia regression results.

arrivals from Canada were approximately 9% higher when direct air                            Variable    Holiday Arrivals                   Other Arrivals
services were available compared to when services were unavail-                                          Model 1    Model 2       Model 3   Model 1     Model 2    Model 3
able, everything else equal.
                                                                                             Constant     8.19     8.87    40.96    5.19**            5.25**    7.80
   For Canada, the coefficients on GDP are highly significant and                              GDP          0.31     0.77      3.92     0.93***            0.80*     0.10
indicate that visitor arrivals are relatively elastic with respect to                        ER          0.62*** 1.39     0.44     0.01               0.20     0.24
GDP. Exchange rates are not significant in any of the models.                                 D           0.17              52.99     0.06                       13.35
                                                                                             GDPxD                0.54     3.94                        0.14      0.86
                                                                                             ERxD                  0.79     0.17                       0.20      0.24
5.2. Chile                                                                                   Q2          0.25    0.25     0.27    0.12***           0.12***  0.12***
                                                                                             Q3          0.25    0.25     0.29    0.26***           0.26***  0.25***
                                                                                             Q4           0.77***  0.77***   0.75***  0.15***            0.15***   0.16***
    Table 4 shows the estimated models. None of the variables
                                                                                             AR(4)        0.48***  0.48***   0.43***
involving air services availability are significant for holiday arrivals.
For other arrivals, the results from models 2 and 3 indicate that air                        R2           0.76        0.76          0.77      0.70       0.70         0.70
                                                                                             N           68          68            68        68         68           68
services availability increases the sensitivity of arrivals from Chile
to changes in GDP and changes in the exchange rate. For example,                           *** Significant at 1% level; ** Significant at 5% level; * Significant at 10% level.
using the results from model 2, the elasticity of other visitor arrivals
from Chile with respect to GDP increases from 1.94 when air                                the exchange rate. For other arrivals, there is a highly significant
services are unavailable to 3.09 when services are available. Thus,                        effect of air services availability on either the intercept (model 1) or
provided the Chilean economy is growing, air services availability                         the coefficients on GDP and the exchange rate (model 2), but only
will have a positive impact on non-holiday arrivals from Chile. If                         the exchange rate effect remains when these effects are combined
Chile suffers a recession, arrivals may be adversely affected to                           in model 3.
a greater extent in percentage terms if air services are available.                            South Korean visitors have many options for travelling to New
    Visitors from Chile have less convenient routes to New Zealand in                      Zealand via hubs in Singapore and Hong Kong. Therefore, the
the absence of direct flights, and this may explain the sensitivity of                      results for South Korea are interesting, as absent direct services
‘other’ arrivals from Chile to service availability. However, we note that                 there are similar convenient indirect routings available as for visi-
many of the estimated coefficients in model 3 vary greatly from the                         tors from Taiwan. The results for Korea may therefore reflect idio-
other estimated models. This instability may be due to the relatively                      syncratic characteristics of the Korean market, and show that there
small sample size, and these results must be interpreted with caution.                     is no straightforward answer to the question of whether the
                                                                                           availability of services affects arrivals from any particular country.
5.3. Indonesia
                                                                                           5.5. Taiwan
   Table 5 shows the regression results for Indonesia. None of the
variables involving air services availability are significant in any of                        Table 7 shows the regression results for Taiwan. Across both
the models. In addition, the economic variables are also not                               types of arrivals and all models, none of the coefficients on the
significant in many cases. This is reflected in the lower R2 values for                      variables involving air services availability are statistically signifi-
these models, and suggests that other factors are driving interna-                         cant. GDP and exchange rates are highly significant in most of the
tional visitor arrivals from Indonesia.                                                    models, and the estimated coefficients on GDP indicate that arrivals
                                                                                           from Taiwan are relatively sensitive to changes in Taiwanese GDP.
5.4. South Korea
                                                                                           5.6. Discussion
   Table 6 shows the regression results for South Korea. There is
weak evidence at the 10% level that air services availability                                 Overall, the evidence regarding the effect of air services avail-
increases the sensitivity of holiday arrivals to changes in GDP and                        ability is mixed. Where such an effect does occur, it seems to be for
                                                                                           purposes of travel other than holiday. It is possible that holiday
Table 4
Chile regression results.
                                                                                           Table 6
  Variable Holiday Arrivals                     Other Arrivals                             South Korea regression results.

             Model 1    Model 2     Model 3     Model 1     Model 2     Model 3              Variable Holiday Arrivals                      Other Arrivals
  Constant 45.92*** 42.94*** 44.54*** 39.28** 36.53*** 2.35***                                    Model 1     Model 2       Model 3   Model 1    Model 2     Model 3
  GDP        3.10***   2.62***   2.70***   2.66***  1.94***   0.01
                                                                                             Constant 47.37*** 58.40*** 73.68*** 29.51*** 36.08*** 31.63***
  ER         0.04      0.90      0.95      0.27     1.85**    1.31**
                                                                                             GDP        3.67***   3.81***   4.38***   2.06***   2.10***   1.92***
  D          0.55                3.16     0.11             60.52***
                                                                                             ER        2.14*** 0.76       0.70     0.29      0.67*     0.49
  GDPxD                0.61      0.46               1.15**    4.41**
                                                                                             D          0.82               44.49      0.72***            9.98
  ERxD                1.63     1.75              3.25**   1.97**
                                                                                             GDPxD                0.77*    1.37                0.57***   1.05
  Q2        0.45*** 0.45*** 0.45*** 0.21*** 0.20**      0.20***
                                                                                             ERxD                2.24*    2.95*              1.61*** 1.44**
  Q3        0.43*** 0.43*** 0.43*** 0.10       0.10     0.10
                                                                                             Q2        0.50*** 0.51*** 0.51*** 0.38*** 0.39*** 0.39***
  Q4        0.16*    0.15*    0.15*    0.05    0.05     0.06
                                                                                             Q3        0.28**   0.30**   0.28**   0.24*** 0.25*** 0.26***
  AR(1)                                    0.27*
                                                                                             Q4         0.07      0.06      0.06     0.07     0.07     0.07
  AR(2)                                                      0.32**
                                                                                             AR(1)      0.44***   0.47***   0.43***   0.32***   0.32***   0.31***
  AR(3)                0.29*     0.29*     0.48***  0.42**
                                                                                             AR(2)      0.34***   0.34***   0.25**    0.25***   0.23**    0.23**
  AR(4)      0.29*** 0.29**    0.29**                      0.32**
                                                                                             AR(4)                                    0.24***   0.22***   0.23***

  R2           0.87          0.89      0.89        0.83        0.85        0.89              R2           0.96        0.96          0.96      0.97        0.98        0.98
  N           60            60        60          60          60          60                 N          124         124           124       124         124         124

*** Significant at 1% level; ** Significant at 5% level; * Significant at 10% level.          *** Significant at 1% level; ** Significant at 5% level; * Significant at 10% level.
D.T. Duval, A. Schiff / Journal of Air Transport Management 17 (2011) 175e180                                                179

Table 7                                                                                        Our results sit within a wider context regarding the extent of
Taiwan regression results.                                                                 liberalisation of access policies. Air access policies can have signif-
  Variable Holiday Arrivals                     Other Arrivals                             icant implications for economic development more generally as
            Model 1     Model 2     Model 3     Model 1     Model 2     Model 3
                                                                                           well as tourism sectors specifically. Given their influence on
                                                                                           inbound travel flows, air service arrangements, and the policies on
  Constant 19.39    23.00    24.50    18.82*   14.66*   14.86*
  GDP        2.06**    2.23**    2.33**    1.90***   1.82***   1.83***                     which they are based, constitute an important aspect of power
  ER        0.78**   0.39     0.37     0.57     1.56*** 1.56***                      relations and negotiations between multiple countries. Air service
  D          0.23                4.01      0.28                1.21                        access policy represents a balancing act between consumer,
  GDPxD                0.16     0.14               0.32     0.41
                                                                                           tourism, and airline interests. Requests for access from foreign
  ERxD                0.75     0.60                1.70      1.75
  Q2        0.84     0.85     0.85     0.45**   0.45**   0.45**
                                                                                           airlines and air service arrangement negotiations hinge on the
  Q3        1.17*    1.16*    1.17*    0.10     0.09      0.09                        desire by both parties to seek fair and equal opportunities the
  Q4        0.12     0.12     0.12     0.09     0.04     0.04                        absence of which may restrain tourism mobilities along a particular
  AR(1)      0.54***   0.57***   0.57***   0.37***   0.31***   0.31***                     route (Duval and Macilree, in press). Our results suggest that, in
  AR(4)      0.88***   0.88***   0.88***   0.51***   0.56***   0.56***
                                                                                           assessing the potential for equal opportunities, air access policy
  AR(5)     0.47*** 0.49*** 0.49***
                                                                                           should consider the net effect of the loss of direct and/or non-stop
  R2          0.92        0.92         0.92        0.88        0.88        0.88            services and how this could influence reciprocal arrangements and
  N         105         105          105         105         105         105
                                                                                           opportunities for a home carrier.
*** Significant at 1% level; ** Significant at 5% level; * Significant at 10% level.              To conclude, air services obviously play a critical role in inbound
                                                                                           visitor access to New Zealand. However, there does not appear to be
                                                                                           strong evidence to suggest that future efforts should focus on
travellers have greater flexibility and are willing to use indirect                         underserved markets (i.e., where direct services do not exist). At
routings if a direct flight is not available. Other travellers, particu-                    present, it seems as though New Zealand’s liberal approach to access
larly business travellers, may be more sensitive to the availability of                    and connectivity is at least partly responsible for ensuring the
convenient direct flights.                                                                  widest range possible of source markets for international tourists.
    Visitors from all of these countries have very good connectivity
options to New Zealand through regional hubs in Australia, Asia and
North America, with some utilising global alliances (Oum and                               Acknowledgements
Zhang, 2001). Canadian visitors, for example, can route from cities
such as Toronto and Vancouver to Los Angeles, Honolulu or San                                 The authors gratefully acknowledge funding from the New
Francisco on Air Canada, and subsequently cross the Pacific on Air                          Zealand Ministry of Tourism and the Foundation for Research,
New Zealand, both of which are current members of Star Alliance.                           Science and Technology under the Tourism and Aviation: Critical
    Given the existence of these alternatives, our results suggest                         Linkages project. We are also very grateful to John Macilree, New
that the hypothesis that non-stop or direct air service availability                       Zealand Ministry of Transport, for his assistance with determining
increases visitor arrivals does not hold in most cases. The excep-                         the dates of air service changes used in the empirical analysis.
tions appear to be for non-leisure travel, for origins such as Chile
where indirect routings are inconvenient, and possibly where                               References
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