More seats, more tourists? Evidence from Peru1

Abstract

The aim of this paper is to assess whether the increase in the number and capacity of non-stop flights to and from Peru between 2004 and 2015 influenced the number of visitors arriving from the country's primary tourist markets, namely the United States and Europe. Utilizing a SARIMA-X model, the results indicate that a 1 % increase in available seats on non-stop flights between the United States and Peru resulted in a 0.36 % rise in American tourists. In Europe, where only Spain, the Netherlands, and France have direct flights to Peru, the outcomes are heterogeneous. The data reveals no significant effect on tourist numbers from these countries. However, increased seat availability on flights to and from Spain positively impacted tourist arrivals from Italy, Switzerland, and Germany. These findings suggest that expanding existing routes positively impacts inbound tourism to Peru, even if not directly from the countries connected via non-stop flights.