New report suggests more flights to European tourist destinations may not benefit these countries’ economies

https://neweconomics.org/2026/06/the-economics-of-air-transport-in-europe

The author of the report Alex Chapman writes:

Today we have launched ‘Part Two’ in our series with T&E on ‘The Economics of Air Transport in Europe’! This report focuses in on the equity of impacts of air travel growth in tourist receiving nations, asking: who wins and who loses?

European cities, such as Dublin, Barcelona, and Lisbon, have plans to expand their airports. What’s missing from all the impact assessments is that they also have acute housing crises. Our analysis shows that air transport growth is making a significant contribution. Over just the next five years the growth of air travel could drive up average annual household rent payments by €200-€250 across Ireland, Spain, and Portugal. And that’s just the average, with bigger increases in the key cities. A direct squeeze on the lowest income households.

While tourism-receiving areas will experience GDP gains and job creation, these alone do not provide a good standard of living for local people. Hospitality workers (where most of the jobs are created) have experienced real-wage declines, and no productivity growth in the largest tourism receiving nations (Spain, Italy, France etc.). Returns instead accrue particularly to large accommodation chains (especially in Spain). This, alongside the saturation of public spaces and strain on public services, suggests there’s a very strong case that communities in many tourism-receiving hotpots actually experience a welfare loss from increased airport arrivals, particularly when the saturation point is crossed.

What I find particularly interesting however, is that there’s also a cost to other non-tourism industries. High property and land prices, like those associated with the current house price bubble, create distortions in business investment. Capital flows away from productive industries with productivity growth potential and into property hoarding and tourism services. An industrial strategy focused on air transport-facilitated tourism is good for creating jobs and short-term GDP, not so good for long-term productivity or living standards… and certainly no good for the climate.