The border effect in European air transport

Abstract

This article deals with the analysis of the border effect in European air transport. The border effect measures how trade or transport flows are diminished when they cross a national border. This topic has attracted a great deal of attention within trade, but it is still little studied within transport. Existing studies have estimated that the border effect diminished air passenger transport flows by a factor of five to six. However, there have been many changes in the European economy and transport since those studies. Our estimate based on a new data set suggested the existence of a border effect in European passenger air traffic flows, albeit with a lower value of around two. A possible reason for the lower value is the growing integration of the European economy and the development of low-cost carriers in Europe between 2000 and 2019. Our econometric analysis also found differences in border effects among European countries. No significant border effect was detected for France, but we did find high and significant effects for Germany, Spain, and Poland. These differences can be attributed to different intensities of intermodal competition on domestic routes.