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Low-cost Carriers, Local Economy and Tourism Development at Four Portuguese Airports. A Model of Cost-benefit Analysis

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Abstract

The liberalisation of air transport created a new era in the sector. The entry of low-cost carriers triggered dynamism and consequently changed the behaviours of the demand and supply of air transport services. The volume of traffic at Portuguese airports increased from 17 million passengers in 2002 to more than 30 million in 2012, representing cumulative growth of 75%. The commitment to low-cost carriers (LCCs) was a determining factor for this growth in that, in 2012, these carriers recorded a market share of 33%. This study aims to analyse the evolution of LCC air traffic in Portugal and its impact on regional economic development. Through a model of cost–benefit analysis, we determine the costs, benefits and net welfare in the developmet of the region driven by the LCC routes of 4 Portuguese airports, Faro, Lisbon, Funchal and Porto, between 2005 and 2012. The methodology proves the existence of a positive net impact driven by LCCs on the local economy, directly through job creation and increased consumption in the tourism sector and indirectly by the increased demand from other sectors.

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  • Costa, Vânia & Almeida, Cláudia, 2015. "Low-cost Carriers, Local Economy and Tourism Development at Four Portuguese Airports. A Model of Cost-benefit Analysis," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 3(4), pages 245-261.
    • Handle: RePEc:ris:jspord:0058
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    1. Donzelli, Matteo, 2010. "The effect of low-cost air transportation on the local economy: Evidence from Southern Italy," Journal of Air Transport Management, Elsevier, vol. 16(3), pages 121-126.
    2. Graham, Anne, 2013. "Understanding the low cost carrier and airport relationship: A critical analysis of the salient issues," Tourism Management, Elsevier, vol. 36(C), pages 66-76.
    3. Hanaoka, Shinya & Saraswati, Batari, 2011. "Low cost airport terminal locations and configurations," Journal of Air Transport Management, Elsevier, vol. 17(5), pages 314-319.
    4. Andreas Wittmer & Thomas Bieger, 2011. "Fundamentals and Structure of Aviation Systems," Springer Texts in Business and Economics, in: Andreas Wittmer & Thomas Bieger & Roland Müller (ed.), Aviation Systems, chapter 0, pages 5-38, Springer.
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    1. Bezruchonak, Andrei, 2024. "The Comparative Study of Connectivity, Performance and Socio-Economic Impact of Low-Cost Carriers in Poznan and Wroclaw (Poland)," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 12(1), pages 1-20.
    2. Hatice Ozer Balli & Faruk Balli & Wai Hong Kan Tsui, 2019. "International tourism demand, number of airline seats and trade triangle: Evidence from New Zealand partners," Tourism Economics, , vol. 25(1), pages 132-144, February.
    3. Almeida, António, 2016. "Modelling Tourism Demand In Madeira Since 1946: And Historical Overview Based On A Time Series Approach," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 4(2), pages 145-156.

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    More about this item

    Keywords

    Air Transport; Airport; Cost–Benefit Analysis; Low-Cost Carrier; Regional Development; Economic Impact;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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