Air Passenger Transport and Regional Development: Cause and Effect in Europe

Abstract

This article scrutinizes the mutual and complex causal relationship between air passenger transport and regional development in the European NUTS2-regions with heterogeneous Granger causality analysis between 2002 and 2011. Employment is used as a relatively robust and measurable indicator of a region’s development and employment in the services sector and in the manufacturing sector is treated separately to discern basic sectoral variances. The proposed methodology allows investigating (i) if air transport in the European regions causally influences employment, (ii) if employment also leads to higher transport levels, and (iii) regional variations in this causal relationship. The results show that both directions of causality occur among the European urban regions, albeit very geographically fragmented. This indicates that air passenger transport is a necessary part of, but not sufficient condition for generating regional development. The more abundant relationships for employment in the services sector confirm the sensitivity of the services industry to air passenger transport.