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How New Airport Infrastructure Promotes Tourism: Evidence from a Synthetic Control Approach in German Regions

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How New Airport Infrastructure Promotes Tourism: Evidence from a Synthetic Control Approach in German Regions A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Doerr, Luisa; Dorn, Florian; Gaebler, Stefanie; Potrafke, Niklas Article — Published Version How new airport infrastructure promotes tourism: evidence from a synthetic control approach in German regions Regional Studies Provided in Cooperation with: Ifo Institute – Leibniz Institute for Economic Research at the University of Munich Suggested Citation: Doerr, Luisa; Dorn, Florian; Gaebler, Stefanie; Potrafke, Niklas (2020) : How new airport infrastructure promotes tourism: evidence from a synthetic control approach in German regions, Regional Studies, ISSN 1360-0591, Routledge, London, Vol. 54, Iss. 10, pp. 1402-1412, http://dx.doi.org/10.1080/00343404.2020.1714022 This Version is available at: http://hdl.handle.net/10419/224973 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ www.econstor.eu REGIONAL STUDIES 2020, VOL. 54, NO. 10, 1402–1412 https://doi.org/10.1080/00343404.2020.1714022 How new airport infrastructure promotes tourism: evidence from a synthetic control approach in German regions Luisa Doerra, Florian Dornb, Stefanie Gaeblerc and Niklas Potrafked ABSTRACT The paper examines how new airport infrastructure influences regional tourism. Identification is based on the conversion of a military airbase into a regional commercial airport in the German state of Bavaria. The new airport opened in 2007 and promotes travelling to the touristic region of Allgäu in the Bavarian Alps. A synthetic control approach is used to show that the new commercial airport increased tourism in the Allgäu region over the period 2008–16. The positive effect is especially pronounced in the county in which the airport is located. The results suggest that new transportation infrastructure promotes regional economic development. KEYWORDS airports; tourism; regional development; transportation infrastructure; synthetic control method JEL L93, O18, Z38 HISTORY Received 19 April 2019; in revised form 14 December 2019 INTRODUCTION economic development (Halpern and Bråthen, 2011; Kazda et al., 2017; Mukkala & Tervo, 2013),1 and might Transportation infrastructure connects regions and pro- even generate positive spillover effects to neighbouring motes regional (economic) development. Investments in regions (Percoco, 2010). However, hardly any empirical roads, railroads and airports reduce transportation costs studies identify the causal effect of airport infrastructure for products and people and help to attract new businesses, on tourism or economic development. Empirical studies production plants and jobs. Moreover, infrastructure con- that examine how infrastructure influences economic stitutes the basic determinant of (inter)national tourism development have to deal with identification issues. Trans- flows. Tourists may well travel to rural areas when roads, portation infrastructure is built to connect economic units, railways and airports facilitate convenient and low-cost hence disentangling causality between new infrastructure journeys. They demand accommodation and amenities, projects and economic development is difficult. New cultural affairs such as theatres and exhibitions, amusement empirical studies use identification strategies such as instru- parks, etc., and their expenditures in these areas often mental variables (IV) or synthetic control to estimate causal endorse regional economic development. effects of infrastructure programmes on population and We examine how new airport infrastructure influences employment (Duranton & Turner, 2012; Gibbons, Lyyti- regional tourism. Empirical studies show that building or käinen, Overman, & Sanchis-Guarner, 2019; Möller & extending airports and airport services enhanced inter- Zierer, 2018), or economic development in individual national tourism flows (Eugenio-Martin, 2016; Khadaroo regions (Ahlfeldt & Feddersen, 2018; Chandra & Thomp- and Seetanah, 2007; Khan et al., 2017), increased pro- son, 2000). Castillo, Garone, Maffioli, and Salazar (2017) duction and employment (Hakfoort et al., 2001; Klophaus, use a synthetic control approach to estimate the causal 2008; Zak and Getzner, 2014), endorsed regional effect of an encompassing infrastructure programme CONTACT a [email protected] ifo Institute – Leibniz Institute for Economic Research at the University of Munich, Munich, Germany. b [email protected] ifo Institute – Leibniz Institute for Economic Research at the University of Munich, Munich, Germany. c [email protected] ifo Institute – Leibniz Institute for Economic Research at the University of Munich, Munich, Germany. d (Corresponding author) [email protected] ifo Institute – Leibniz Institute for Economic Research at the University of Munich, Munich, Germany. Supplemental data for this article can be accessed at https://doi.org/10.1080/00343404.2020.1714022 © 2020 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. How new airport infrastructure promotes tourism: evidence from a synthetic control approach in German regions 1403 (including a new airport) on employment in the tourism on the former NATO airbase because of the high technical sector in Argentina. However, they do not isolate the effect endowment and size of the runway. Local governments and of the airport. Scholars employing IV approaches show that the state government supported the civil airport with airports or air passenger traffic increased the local popu- investments and subsidies for conversion and construction lation (Blonigen & Cristea, 2015), employment in ser- measures. Memmingen Airport, however, does not receive vice-related industries (Brueckner, 2003; Green, 2007) subsidies for its operating business and has reported a posi- and local employment in services that directly benefit tive operating result (earnings before interest and taxes – from the air connection (Sheard, 2014). Koo, Lim, and EBIT) for several years.2 Dobruszkes (2017), however, also use an IV and find no FMM started operating commercial air service in mid- effect of direct air services on tourism inflow. Tsui (2017) 2007. The airport already had over 450,000 passengers in uses IV and difference-in-differences approaches and 2008 and over 800,000 passengers in 2009, with scheduled shows that low-cost carriers (LCCs) have a positive effect flights operated by TUIfly and Air Berlin in the first years. on domestic tourism demand. The regional airport is specialized in services by LCCs, We investigate how new airport infrastructure (special- such as the Irish airline Ryanair (scheduled flights since ized in LCCs) influences additional guest arrivals in the 2010) or the Hungarian airline Wizz Air (since 2009).3 tourism sector. The identification is based on the conver- The number of passengers increased to 1.17 million by sion of the military airbase of Memmingerberg into the 2017, a decade after its opening (see Figure A1 in Appen- regional commercial airport of Memmingen (Munich- dix A in the supplemental data online). West) in the German state of Bavaria. The military airfield The airport connects several countries in Europe and was built by the Nazi regime in 1935–36 and was reused by the Mediterranean region to the Allgäu region. German the German Bundeswehr after the Second World War. In domestic flights were the most important in the first two 2003, it was closed because the federal government decided years after the launch of air services at FMM, but have to reorganize and consolidate the German Bundeswehr. been discontinued since 2011. In 2018, connections to We exploit the conversion of the airfield to a commercial and from Spain, Portugal, Romania, Bulgaria, Ukraine airport specialized on LCCs as an exogenous positive infra- and the UK had the highest passenger volume at Memmin- structure shock for the touristic sector in counties close to gen Airport (see Table A1 in Appendix A in the sup- the airport. The commercial airport opened in 2007 and plemental data online). A passenger survey conducted in facilitates travelling to the touristic region of Allgäu in 2018 has shown that 40% of all passengers at Memmingen the Bavarian Alps. We use a synthetic control approach Airport are incoming passengers,
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