Low cost airlines and international tourism demand. The case of Porto’s airport in the northwest of the Iberian Peninsula

• Published in: IDEAS Working Paper Series from RePEc
• Main Authors: Álvarez-Díaz, Marcos, González-Gómez, Manuel, Otero-Giráldez, María Soledad
• Format: Paper
• Language: English
• Published: St. Louis Federal Reserve Bank of St. Louis 01.01.2019
• Subjects: Airports; Tourism; Iberian Peninsula; Portugal

It is widely argued that low-cost carriers (LCCs) lead to an increase in tourism demand. However, there is no conclusive evidence when the airport is located in a region with large diaspora and outbound tourism. To gain insight into the relationship between LCCs and international tourism demand, we analyse whether a causal relationship exists between the number of international LCC passengers at the Porto airport and international tourism demand in the Galicia-North Portugal Euroregion using a vector autoregressive model. We evaluate the dynamics of the impacts of the LCC passengers on international tourism demand in a tourism demand model framework. The number of low-cost international passengers has a positive influence on international tourism demand in the regions of North Portugal and Galicia (Spain). Furthermore, the confidence interval for estimated elasticity overlaps the values estimated for main tourism destinations in previous studies in the Iberian Peninsula.