Improving the air connectivity of hub airports: an instrument to boost the economic performance of EU countries?

Maria Inês Castro and Maria Paula Fontoura

No 2021/0200, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: This study discusses the importance of hub airports’ air connectivity in improving the economic performance of the European Union countries during the period of 2008-2019. For this purpose, we use two different measurements of air connectivity - airport and hub connectivity, which are calculated using the Nestcan Model, and then, as a first step, we analyse the degree of linear association of each one of them with gross domestic product (GDP) and with a set of economic variables (hereafter designated as EVs) which, according to the literature, are expected to be positively determined by air connectivity and will boost a country´s economic performance, namely: inflows and outflows of foreign direct investment (FDI), imports, exports, and international tourism expenditures. We conclude that the type of air connectivity adopted matters. The results show that hub connectivity has a higher correlation with key variables for economic growth and is increasingly correlated with GDP during the period analysed, while a downward tendency over the more recent years was observed with regards airport connectivity. Next, we test the strength and direction of the quantitative relationship between hub connectivity and GDP/each EV for a sample of EU countries with a hub connectivity level of at least 5% of the TOP hub-connected EU country (Germany). Finally, we extract conclusions for individual countries, with the help of the scatter diagrams and regression lines. The results provide policy guidance regarding the role of hub connectivity in increasing the economic performance of a country, especially for those countries that are highly dependent on FDI, trade, and tourism for economic growth, as we illustrate for the case of Portugal.

Keywords: air connectivity; airport connectivity; hub connectivity; foreign direct investment; international trade; tourism; Netscan Model; European Union; Portugal. (search for similar items in EconPapers)
JEL-codes: E69 F20 L93 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-int and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp02002021

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