Abstract

Studies on the economic impact of air cargo traffic have been gaining traction in recent years. The slowed growth of air cargo traffic at California’s airports, however, has raised more pressing questions amongst airport planners and policy makers regarding the determinants of air cargo traffic. Specifically, it would be useful to know howCalifornia’s air cargo traffic is affected by urban economic characteristics surrounding airports. Accordingly, this study estimates the socioeconomic determinants of air cargo traffic across cities in California. We construct a 7-year panel (2003-2009) using quarterly employment, wage, population, and traffic data for metro areas in the state. Our results reveal that the concentration of service and manufacturing employment impacts the volume of outbound air cargo. Total air cargo traffic is found to grow faster than population, while the corresponding domestic traffic grows less than proportionally to city size. Wages play a significant role in determining both total and domestic air cargo movement. We provide point estimates for the traffic diversion between cities, showing that 80 percent of air cargo traffic is diverted away from a small city located within 100 miles of a large one. Using socioeconomic and demographic forecasts prepared for California’s Department of Transportation, we also forecast metro-level total and domestic air cargo tonnage for the years 2010-2040. Our forecasts for this period indicate that California’s total (domestic) air cargo traffic will increase at an average rate of 5.9 percent (4.4 percent) per year.