Analysis of the Predictors of Demand for Foreign Air Passengers to Mongolia and Tourism: Using an Augmented Gravity Model

The civil aviation sector has played a crucial role in contributing to Mongolian regional development and promoting tourism. The number of inbound passengers served by national air transport to Mongolia has increased significantly due to the construction of the new airport and the introduction of a visa-free regime for specific countries. Forecasting passenger demand is crucial for estimating air passenger potential, expanding airports, and establishing new terminals. The purpose of this study was to examine the predictors of demand for foreign air passengers to Mongolia and to identify the potential for demand. The demand for air passengers arriving from the top 24 foreign countries between 2015 and 2024 was analyzed using the augmented gravity panel data analysis. The results from the regression analysis of the augmented gravity model showed that the coefficients of variables, including Mongolia's real GDP per capita, the number of foreign passengers arriving for travel, work, and visit purposes, the number of foreign passengers arriving within 30 days and from visa-free countries were statistically significant and positive effects on the demand with expected signs. In contrast, the number of foreign passengers arriving for study purposes and the Covid effect was insignificant.