Typology: Characteristics
Cluster One: Business demand and lower connectivity
Consisting of 32 regions (12%), with 6% of total population and 3% of total GDP across Europe, this grouping is primarily found in Eastern Europe, and are not typically major tourist destinations. Incomes and air connectivity are lower, and business travel demand shows some growth, leaving room for connectivity-led improvement. There is moderate probability of a causal relationship running from air connectivity to GDP.
Cluster Two: Tourism-dependent and lower-income regions
Consisting of 105 regions (38%), representing 37% of population and 33% of GDP, this grouping is mostly found in Southern Europe, with larger-than-average tourism economies. Incomes are slightly lower than average, however stagnation of business air travel demand is observed. While there is moderate probability of a causal relationship running from air connectivity to GDP, this is tempered by factors including the relative dependence on air transport for tourism arrivals compared with land routes and domestic tourism, tourism infrastructure, and the duration of stay. Namely, tourism value could be improved via land transport, longer stays and local accommodation, rather than the quantity of air arrivals.
Cluster Three: Low business demand and high outbound tourism
Consisting of 76 regions (28%), home to 30% of population and 28% of GDP, this grouping is most commonly found in Germany, the UK, Czechia and Scandinavia. Air connectivity is already well-developed, and there is evidence of business air travel demand saturation, or even decline. Here there is low support for a causal relationship running from air connectivity to GDP; instead causality is highly likely to run from GDP growth to air connectivity. That is to say, growing incomes are fuelling demand for outbound leisure travel, leading to tourism spending deficits.
Cluster Four: High income, high connectivity regions facing saturation
Constituted of 60 regions (22%), which host 26% of population and 36% of GDP, this grouping includes most European capitals, and most of the best-connected regions on the continent – in Southern and Western Germany, the Southeast of the UK, and much of Belgium, the Netherlands, and Sweden. With high GDP, these regions appear to be approaching a point where additional air connectivity no longer adds significant value. There is evidence of business air travel demand saturation. Support for a causal relationship from connectivity to GDP is low.
Key drivers of divergence
What is driving this divergence between regions? The study identifies two key factors.
1) Demand for business travel
The first factor is changes in the demand for business travel. In Clusters 2, 3 and 4, high levels of air connectivity have saturated this demand. And for a number of business sectors, the marginal benefit of air travel compared with digital alternatives has declined. Data from London Heathrow and Barcelona airports, as well as national data from France and Germany, point to a similar story of declining and/or low business shares of air trips.
