Mulat, Teshome(Dr.)Estifanos, Eyob2021-07-272023-11-042021-07-272023-11-042001-07http://etd.aau.edu.et/handle/123456789/27381Since 1975, for about 20 years, air transport service had been provided by single Government enterprise, Ethiopian Airlines. The sector was moderately opened to private investors by the Federal Democratic Republic of Ethiopia Investment Proclamation No. 3711996. The restrictive provisions of this proclamation permit only Ethiopian nationals to invest in this sector using aircraft of maximum loading capacity up to 20-passenger or cargo capacity up to 2700kg. However, the proclamation plays no significant role in enhancing the capacity and competition in the overall domestic passenger air transport service and none in scheduled one. It is hypothesized that air travel demand is determined by income of the population, price of air travel, access to alternative means of transport and price of competing service. Furthermore, the demand of air travel is expected to be price inelastic. Using quarterly time series data and co-integration analysis the long- run relationship result suggested that price of air travel, income and access to alternative means of transport significantly determine the demand for air travel while price of competing service is insignificant. In the short-run analysis only price of air travel is found to be significant while the other variables are not significantly different from zero. The result also suggested that the price elasticity of demand for air travel is unitary. The policy conclusion is that price is a significant factor determining schedule domestic air transport demand and hence private participation, competitiveness and supply of the service in Ethiopia.enDemand For DomesticTransport in EthiopiaThesis