Nonlinear effect of air travel tourism demand on economic growth in Fiji

In this study, we examine the nonlinear effect of international air arrivals on economic growth in Fiji from 1975 to 2017. We use the nonlinear autoregressive distributed lag model for estimation, and control for structural breaks identified by the Bai-Perron approach. The results show that economic growth is more sensitive to declines in air arrivals compared to equivalently sized increases. The results indicate that ensuring stability in tourist arrivals by air is crucial for sustainability in the airline industry and for long-run economic growth.