Structural and Financial Determinants in the Development of the Aviation Sector: Evidence from Türkiye

Within the scope of this study, it is aimed to address the structural and financial determinants of passenger and freight transportation in the aviation sector. In order to analyze the sensitivity of the traffic in air transportation to various macroeconomic factors, two separate baseline equations were constructed using a semi-logarithmic framework, which covers the period between 1993-2023 and utilizes annual data. In the empirical analysis process, the ARDL Bounds Test approach was adopted to determine the long-term cointegration relationships between the variables; the Fourier Toda-Yamamoto test, which takes structural breaks into account and prevents information loss, was used to analyze causality relationships. In light of the empirical findings obtained, it is demonstrated that domestic credit expansions (DCREDIT) and market valuations (MCAP) play a dominant role in long-term growth in both passenger (PAX) and freight/cargo (FRE) models. Moreover, the findings indicate that the value-added of Machinery and Transport Equipment (MTE) manufacturing is significant and positive at the 1% level in the passenger transportation model and the 10% level in the freight transportation model; thus, technological production, such as machinery and transport equipment, is of vital importance in the development of the sector. In addition to this, the Foreign Direct Investments (FDI), in other words, foreign capital inflows have not been able to trigger structural expansion in the development of air transportation as expected. Finally, the results of the Error Correction Mechanism in the scope of the model showed that short-term shocks converge back to long-run equilibrium at a statistically significant speed.