Could the end of cheap flights threaten Portugal’s tourism boom?

Few countries in Europe are as dependent on affordable air travel as Portugal.

For millions of visitors from Britain, Germany, France and elsewhere, the ability to fly to Faro, Lisbon or Porto for little more than the cost of a train journey at home has transformed Portugal into an easily accessible short-break and holiday destination.

Low-cost airlines have been central to that transformation.

Ryanair and easyJet have dramatically expanded their presence in Portugal, while competition from TAP, British Airways, Jet2 and numerous European carriers has helped keep fares competitive and increase the number of destinations directly connected to the country.

But the era of ever-cheaper air travel may face increasing pressure.

Airlines are dealing with higher operating costs, environmental taxation and the enormous expense of replacing older aircraft with more efficient models. Geopolitical instability can also increase fuel prices and force airlines to avoid certain airspace, adding both time and cost to flights.

For Portugal, the consequences of permanently higher air fares could be significant.

Tourism represents a major part of the national economy, and the Algarve is particularly dependent on international visitors arriving by air. Faro Airport is effectively the gateway to the region’s tourism industry.

However, not all visitors would be affected equally.

Travellers staying in luxury hotels or renting high-end villas are unlikely to cancel a holiday because a return flight costs an additional €100. The greatest impact could instead be felt in the more price-sensitive end of the market, particularly among families and younger travellers.

City breaks could also be affected. A €30 or €40 flight encourages spontaneous weekend travel to Lisbon or Porto in a way that a €200 fare may not.

Portugal therefore has a strong interest in maintaining competition between airlines and ensuring that its airports remain attractive places from which carriers can operate.

There could, however, be another side to the story.

If flights become more expensive, travellers may choose to take fewer but longer holidays. Instead of flying to Portugal three times a year for long weekends, visitors might come once and stay for two weeks. This could potentially benefit hotels, restaurants and local businesses while reducing the environmental impact associated with frequent short trips.

Portugal also has advantages that many competing destinations lack. Its main tourism markets are relatively close, with flights from much of Europe taking between two and three hours.

The country is therefore unlikely to lose its position as a major European tourism destination.

But the extraordinary expansion of Portuguese tourism over the past two decades has been built partly on the assumption that flying will remain plentiful and affordable.

If that assumption changes, Portugal’s tourism industry may need to adapt with it.

Bruce Hawker

Contributor for the Portugal Resident