Abstract
This study presents an exploratory analysis of the consumer surplus of passengers flying across the Taiwan Strait. The travel cost method was used on the data collected from Taipei-to-Shanghai travelers. Based on the analysis, the truncated negative binomial model was selected to derive the air travel demand function, and the consumer surplus was calculated as the reciprocal of the coefficient of the air travel cost variable. The results show the consumer surplus is about 58,000 NT$ per trip, per passenger for the sample, and the CS of passengers using direct flights is approximately 1.5 times of the corresponding value of passengers using indirect flights. This paper proposes a feasible methodology to analyze the economic benefits of the air transportation market, particularly for the specific case examined in this work. This investigation also presents some interesting directions for future studies.
