Booming Leisure Air Travel to Norway – The Role of Airline Competition

Abstract

Economic growth and cheap air travel have increased airborne tourism in Europe. In Norway, the introduction of low‐cost carriers (LCCs) has given a boost to incoming tourism by air, as distinct from sea, road or rail, which seems to have more or less stagnated. Analysis shows that economic growth, reduced air fares and the advent of LCCs explain the different growth rates in incoming tourism by air between countries of origin. Reduced fares were the most important factors driving incoming air tourism during the period 2003–2007. Even though growth rates are highest from the new European Union countries, just as in many other European markets, traditional countries of origin still dominate in absolute terms, e.g. the Nordic countries, Germany, the UK and The Netherlands. Holiday travel and visiting friends and relatives are the fastest growing incoming tourist segments.

Key Words:

• Aviation
• low cost carrier
• airfare
• inbound tourism
• airline competition

Acknowledgements

The authors gratefully acknowledge the support from Avinor in accomplishing this study.

Notes

1. Avinor, its subsidiary Oslo Airport and the Institute of Transport Economics formed a partnership for the studies, which have been financed by Avinor and Oslo Airport. The surveys analyse the role and function of air transport and furnish data for traffic forecasts, airport and route planning.

2. These are estimates based on passenger statistics from the airlines for 40–50 randomly selected flights.

3. Analyses are based on data from the NATS, and thus single‐year observations are not available. NATS data are the only available source for this type of information, since traffic statistics from the airlines do not display details on routes (e.g. nationality, trip purpose, etc.).

4. A dummy was used due to colinearity problems if the change in LCC share was applied directly. The figure 30% was decided inductively; there was considerable jump from 32–33% (Spain and Lithuania) to 20% (France and Italy) and 18–16% (Germany, Austria, Sweden).

5. Figures include only routes with 15,000 PAX or more.