Effect of low-cost airlines on tourism in Spain. A dynamic panel data model

This article estimates the impact of low-cost airlines on Spanish tourism during the first decade of the 21st century looking tourist traffic from the principal EU-15 member states using a dynamic panel data. The expansion in low-cost airline activity has had significant, positive direct and indirect effects on the Spanish economy. The study also looks at some of the key elasticities of demand that have influenced this.

Research highlights► The expansion in low-cost airline activity in the tourism market has had significant, positive direct and indirect effects on the Spanish economy. ► It is found that a 10% rise in the number of visitors traveling by low-cost carriers increases the average per capita number of tourists from EU-15 countries by 0.2%. ► Any potential negative effect of increasing oil prices in 2006/7 was at least partially offset by growing competition in the air transport market resulting from low-cost carrier entries.