Small airports: Runways to regional economic growth?

Regions typically take great pride in having an airport within their boundaries. Policymakers go through great lengths in maintaining and sustaining airports, small as some of them may be. This support is often justified by pointing out the potential positive economic spin-off of the airport. This study adds to the body of literature on the role of airports in economic growth by assessing the link between air accessibility – with a focus on smaller airports - and regional economic development across European regions. We take into account spatial and airport heterogeneity as well as overlapping catchment areas. The data set consists of a strongly balanced panel of 274 European NUTS-2 regions spanning the years 2000–2018. For most regions, the contribution of smaller airports in providing accessibility is found to be limited. Nevertheless, in 2018, air accessibility for 19% of the European population covered is provided mainly by medium-sized and small airports, and for 3% mainly by small airports. The long-run elasticity between air accessibility and GDP per capita is estimated at 0.106 and is stronger for large airports (0.179) than for medium-sized (0.033) and small airports (0.022). Causality mainly runs from economic growth to air accessibility, especially considering smaller airports. However, considerable spatial heterogeneity exists in the nature of this causal relationship, with dense regions with lagging per capita GDP levels especially benefiting from air accessibility.