A Study on The Economic Impact of the 2001 Madeira Airport Enlargement

Abstract

The expansion works at the Madeira Airport in 2001 were expected to foster tourist demand and to structurally change the tourism industry in Madeira, thereby reinforcing the dynamics of regional development. Seven years on, it is now important to assess the various areas where it impacted, namely with regards to the creation of new tourist destinations and the expansion of demand. Using data on passengers’ travels and tourism demand, and making use of a simplified econometric model, we have estimated the impact of the expansion both in terms of demand and GDP. The results show a decreasing rate of growth from 2001 on, although a concession must be made to allow for the fact that, without the expansion, a not so favourable result might have emerged. The proposed methodology is, however, a starting point for the approach to the transport sector in general and the supply of air transport within the context of regional development in particular.