Starting next summer, European budget travelers will have more opportunities to visit Portugal’s sundrenched beaches and feast on its famous seafood. Ryanair has announced that it will invest 100 million euros for new flight routes to Portugal. This expansion is indicative of Portugal’s growing appeal amongst tourists and the increased importance that tourism plays in the Portuguese economy.
Ryanair is a pioneering low-cost airline that operates more than 2,000 flights each day out of around 200 European airports. The company has helped revolutionise the tourism industry, with weekend and short trips becoming the norm for many European travellers. In order to further capitalise on this successful business model, Ryanair plans to create 12 new routes to three Portuguese cities: Lisbon, Porto and Faro.
This expansion could be seen as a bit of a gamble given the competitive and financial pressures on Europe’s budget airline industry. However, Portugal is viewed as an important growth market, thereby justifying Ryanair’s expansion. According to the company’s CEO, this newly announced investment in Portugal is “important because these are difficult times for airlines…oil is at 85 dollars a barrel, prices are dropping, and all airlines are reporting losses in revenue”.
Portugal’s popularity with tourists has skyrocketed over the past several years. The United Nations World Tourism Organisation estimates that between 2010 and 2016, Portugal saw a 168 per cent increase in overseas arrivals. This makes Portugal second in the world to Japan for its growth of visitor numbers throughout these years.
However, this spike in tourism isn’t just a boon for the airline industry. Portugal’s economy has benefited significantly from the inflow of visitors. As of 2017, tourism contributed 6.8 per cent to Portugal’s GDP and directly supported more than 400,000 jobs. Portugal’s Secretary of State for Tourism, Ana Mendes Godinho, is keen to point out that revenue generated from tourism is actually exceeding the growth in tourist numbers, thereby making it both a lucrative and sustainable industry. As Mendes explained, “This is what everyone wants, greater value all the time and more diversified markets”.
While the airline industry and politicians are upbeat about the future prospects of the Portuguese tourism industry, its growth could be hampered by increased airport congestion. Between 2013 and 2017, there was a 66 per cent increase in passengers arriving at Lisbon’s Humberto Delgado Airport. With the airport having surpassed its capacity forecasts for 2025 as early as 2016, it may face difficulty in accommodating more passengers.
In an effort to prevent an airplane bottleneck forming at Portugal’s largest base, the government has put a two-fold plan in place through the signing of a Memorandum of Understanding between the Portuguese Government and the VINCI-owned ANA Aeroportos de Portugal.
The first remedy for overcrowding at Lisbon’s airport will be to expand the airport’s base to maximum capacity, which will require the temporary closure of it second runway for air expansion, an announcement made by ANA Aeroportos de Portugal last week. The second solution will be to open up an additional airport in Montijo, just a short distance away from the capital. The former military airbase has been slated for a 33 million euro conversion into a civilian airport with the hope that it will become fully operational by 2022. Once completed, it is estimated that the airport could manage 24 take-offs and landings per hour, increasing the total number of annual passengers traveling to Lisbon by around 23 million.
Nevertheless, there are still some hurdles to cross. In August, ZERO, an environmental NGO, has issued a complaint to the European Commission over the conversion of the Montijo airbase. It wants the government to conduct a Strategic Environmental Assessment, which is more rigorous than the initially proposed environment impact assessment.
Despite this challenge, the Portuguese government remains committed to the conversion of the Montijo airbase. Prime Minister Antonio Costa has stated that the Montijo airport is the only solution to avoiding gridlock at Lisbon’s main airport and that it is waiting for the results of an environmental impact study so that the plan can be irreversibly finalised. It therefore looks likely that Portugal’s tourism sector will continue to see healthy growth into the future.