Yemenia Focus ( Issue No. 2) DEMAND ANALYSIS – ADEN HUB

GRAVITY MODEL

By : Mohammed Salem Awad

Aden Regional Director - Yemenia

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Yemenia Focus ( Issue No. 2) DEMAND ANALYSIS – ADEN HUB

GRAVITY MODEL

By : Mohammed Salem Awad

Aden Regional Director - Yemenia

The strategic location of Aden city in heart of

the world enhance the business activities in

near future in region.

Aden Airport is an excellent bridge between

Arabic countries and the neighborhood

African cities. The most important issue, the

integrated system between three main parties,

i.e Airlines, Airport, and local Authority .

There are many methods to evaluate demand

for new network, we address one of these

methods – Gravity Model which define the

potential traffic between countries in the

proposed network. The idea is to address any

traffic hub that more likely close to Aden city.

So we can reflect Sanaa data airport in this

report, to use its parameters to reflects traffic

demand for Aden airport.

Every team has its own words, but basically all roads lead to Rome. We explore some

basic parameters of the model that address by well brand name consultant company

which is Lufthansa Consulting.

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The model basically reflects the relation between many parameters as shown by the

experience of Lufthansa consulting.

Demand Analysis - Methodology:

Gravity Model – Econometric

The gravity model used in transportation is based on Newton's Law of Universal

Gravitation as is used in Physics. Newton's Law postulates that the force of

gravitational attraction between any two massive bodies is proportional to their

masses and inversely proportional to the square of the distance between their centers

(Pogge). Likely wise in business, we use the same concept but we analogue its input

with different parameters as shown in next step. Thus, the model becomes

However, there are numerous other factors that can be used as factors in the model.

Generation factors can include the personal disposable income of the people living in

the area, the gross domestic product of the area, or the level of business activity.

Attraction factors can include the number of tourists to the region, the gross domestic

product of the area, or the level of business activity. Impedance factors could include

the cost of travel, the time taken to travel, and regulatory issues. Any of these

additional factors could be included easily in the model through the inclusion of

additional terms, provided there is no strong correlation between the factors in the

model. Specifically, both distance and cost are important determinants of travel, but

since they are likely to be highly correlated, only one can be included in the model

(Howrey p218).

For the purposes of this research, the basic gravity model was extended in some ways

to include other economic variables which were believed to have a significant effect

on the demand for air traffic passengers.

The model used is as follows:

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Case Study :

1- Input Data - Sanaa Airport - Cargo Activities

2- Analysis : Gravity Model based on Yemenia Learning Curve

3- Results – Aden Airport

Data stability is an issue for this study due to the political environments in Yemen,

meanwhile Sanaa may represent a good source to develop the data base for the study,

by developing the econometric model Sanaa Airport, and using the model parameters

to reflect the impact on Aden Airport.

1 - Data - Sanaa Airport - Air Cargo Traffic 2009

Tthe most challenging part of this study was the collection of sufficient, accurate data.

Access to traffic volume data was extremely difficult, especially pooled data, which

was the "ideal" data set required for the building of the above model.

The export data was based on the volume of air cargo data that was exported from

Sanaa International Airport to its various international2 destination countries during

1999, as supplied by Statistics Yemenia Cargo Department . The data is measured in

Kilograms of air cargo transported

The original number of partner countries included in the sample set was 23 countries

and territories. This was the total number of countries for which Yemenia Cargo

Department , the sample has been deemed sufficient for the purposes of this research.

In the following table

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2- Analysis: : Gravity Model based on Yemenia Learning Curve

SANAA Hub for comparison the model ( Actual vs Model values ):

By referring to the main model formula and using data of table (

) of 23 observation as input for the analysis by using the proper

regression program, the output summary will be as in table (2 ):

Adjusted R Square = 66.8 %

Where most estimating parameters of the model are listed also in

the following table.

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3- Results – Aden Airport :

The result of the analysis for Aden Airport Hub

are explore Cargo Kg units, the expected market

will be 7000 tonne based on Yemenia Model,

while this figure should multiply by 2 to get the

total market that also served by other operators.

So the total expect market will be 14,000 tonne (

Air Cargo )

While the potential from Aden Sea port will be

75,000 tonne as Air cargo

So The Total Expected Air Cargo Business for

Aden:

1- Demand By Air Cargo Operation ( 14,000

Tonne)

2- Demand By the Strategic Location of Aden City

in the World ( 75,000 Tonne )

Conclusions :

The study shows clearly a huge demand for air

cargo business in Aden in spite of competition of

the major giants in the region ( Emirates, Etihed,

Saudia Cargo and other Cargo companies), the

strategic location of Aden city add a

competitive advantage for the business of Air

Cargo, while the business can be secured by

developed an integrated system for Aden

Cargo Village, Aden Seaport and Aden Free

Zone, the annul air cargo potential for Aden

Air port is 14,000 tonne, which the

contribution of Aden Seaport for Aden Cargo

Village may reach to 75,000 tonne per year.

Aden City is in the heart of the world, and

located at the midpoint of two main major

global cargo hubs.

Singapore & China Hubs in Asia and

Rotterdam Hub in Europe as shown in the map

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Appendix: