Spatial dependence in (origin-destination) air passenger flows

We explore the estimation of origin-destination (OD), city-pair, air passenger flows. Our dataset contains 279 cities, worldwide, over 2010-2012. Allowing for two gravity model specifications (log-normal and Poisson), we compare non-spatial and spatial models. We are the first to apply spatial econometric flow models and eigenfunction spatial filtering approaches to air transport. Distinguishing between origin, destination and network effects, we determine the impact and significance of a change in a variable in a given city, on flows originating from and going to that city and originating from a different city and going to an alternative city. Finally, we compare models based on different specifications of the spatial weight matrix.