Interaction between low-cost airlines and international tourism demand in destinations with large diaspora. The case of Northern Portugal

The purpose of this paper is to contribute to filling a gap in the understanding of the relationship between the presence of low-cost airlines (LCAs) and international tourism demand in a region with a large number of nationals living abroad. Our study examines this relationship in North Portugal over the period of 2005-2016. It involves testing the existence of a long-run equilibrium relationship between the variables by using a cointegration approach and estimating the error correction model (ECM). LCAs and the travel demand associated with the migrant population have been proven to help international tourism growth. The diaspora has ensured a minimum amount of traffic demand for LCAs' connections. Moreover, international tourists have contributed to the expansion of LCAs' air services. These results suggest that the level of competitiveness of the destination became a priority for the different stakeholders in the region not only to attract international tourists but also to support the development of indispensable medium- and long-haul air services at the right price.