Lisbon Airport “imposes severe limitations on entering new strategic markets”

The president of Turismo de Portugal is dissatisfied with the situation at Lisbon airport, not only because it is failing to welcome tourists in a way that provides a positive start to their experience in the country, but also because it is creating “very significant limitations in terms of entering new markets that are strategic for Portugal”.

“Lisbon airport has its capacity limitations, it obviously has difficulty growing in terms of rotations, in terms of movements. This means that there are very strong limitations, even in terms of entering new markets that are strategic for Portugal, due to the difficulty of finding slots and space on the runway for this to happen. But that is a job we are going to do”, says Carlos Abade, in ECO dos Fundos, ECO’s fortnightly podcast on European funds.

The official is concerned, feeling that “there is discomfort, particularly among the airlines themselves regarding this situation” and explains that everyone is working on various fronts, namely to attract aircraft with greater capacity and higher occupancy rates. Even so, Carlos Abade advocates focusing on greater added value and less volume. “We have to evolve in terms of quality. We should not evolve towards massification”, he says, concluding emphatically that Portugal does not have too much tourism and that the sector “has evolved and grown more in so-called low-density areas than in coastal areas”.

Does Portugal have too much tourism?

No, of course Portugal does not have too much tourism. Fortunately, Portugal has a strategic asset for its economy, which is tourism. It is good to see that Portugal is the 12th most competitive destination in the world, which means that for many years it has been able to compete with the best destinations in the world in terms of structuring its offer, working with the territory and partnerships. This means that tourism is a strategic asset for Portugal that it must take advantage of. Last year, tourism represented 27.7 billion euros, which is 20% of the country’s exports. We must ensure that tourism is the engine of growth, of increasingly balanced growth, and that it fulfils its main function. Tourism is not an end in itself. We do not work for tourism. We work so that tourism can be a pillar of prosperity and well-being for the population. That is what drives us at the end of the day.

Tourism is not only good insofar as it generates more value for the economy. It is good insofar as it generates ever more value for people and their well-being. But this concern is one that must be constantly on our agendas: how do we ensure that this particularly important and powerful sector has an increasingly positive impact on communities? This also means addressing certain issues that need to be dealt with in order to make this growth increasingly balanced.

Tourism remains heavily concentrated in Lisbon, Porto and the Algarve, resulting in higher property prices, pressure on infrastructure and city cleanliness. The debate over whether there is too much tourism therefore makes sense.

The country has to evolve and grow. If we look at the city of Lisbon, for example, and compare it with what it was 20 years ago, we can see that Lisbon has grown, expanded, improved, and has been able to welcome more tourists and, above all, to share more and more spaces between residents and visitors. The country cannot be static; it must constantly improve its infrastructure, mobility and management. Today, we must be increasingly aware that the country must be managed in an increasingly intelligent way. We must look at the areas in which we need to take action and understand how we can work together, in partnership with local authorities, to identify the issues that arise. In some municipalities, there are certain types of problems that do not exist in others, and we have to deal with them. We have to preserve this strategic asset for Portugal, which is tourism, and we have to take care of our territory, our people, our residents and our culture. It is this balance between one thing and another that we have to be increasingly intelligent in managing.

The appreciation that resulted from the introduction of tourism in the cities of Lisbon and Porto was visible. Twenty years ago, these were cities with significant weaknesses, degraded, with difficulties even from a social point of view. Tourism helped to enhance their value. Companies that were unable to operate there began to arrive, companies with greater added value. The city was enhanced. That is good, that is natural. That is the path we must take — basically increasing wealth creation, so that we can then increase people’s income.

Wouldn’t Portugal benefit more from focusing on segments with higher added value? Fewer tourists, but each tourist spending more?

This is the path that has been taken. The evolution of tourism revenues versus the evolution of tourist numbers has been much more favourable to revenues than to tourist numbers. As a result, we have been able to create a tourism, hotel and restaurant offering that is increasingly structured, sophisticated and capable of entering segments with higher added value. We must evolve in terms of quality. We must not evolve in terms of massification. We cannot, on the one hand, say that we do not want massification and, on the other hand, criticise quality when it leads to price increases. Quality means working harder, paying better wages, increasingly valuing value propositions, and positioning the value proposition in segments with ever-increasing added value.

When you look at the work that has been done, are you satisfied with the cohesion that tourism has brought to Portugal?

Tourism has evolved and grown more in so-called low-density areas than in coastal areas. It has grown by around 3% (annual average). This figure should be even higher. Our aim is for tourism’s enormous capacity to create value to reach the whole country. This is good because, in a way, it helps to spread tourist flows more evenly across the country. And it is good insofar as it creates value for the people and residents of those same areas.

Tourism is an extraordinary tool for the cohesion of the country, as it has the capacity to bring purchasing power to these other territories, which they would not otherwise have, and which can justify and substantiate the opening of businesses and the attraction and retention of people. This is a process that tourism considers to be its responsibility. It means that we will have to invest more and more to create better conditions for people to get to know the rest of the country.

What does that mean?

It means a lot: improving the territory, infrastructure, and increasingly managing mobility within the territory. When tourists travel to the interior of the country, they need to know how to get there. How we manage road transport, how we provide better experiences through rail transport, how we prepare the country for a period of increasing growth in inland areas, is a challenge. In fact, this challenge was identified in the context of preparing the 2035 Tourism Strategy.

Why not invest more in the use of Beja airport? It is an infrastructure paid for with European funds, which is operational and would allow more tourists to visit the interior of the country.

Airlines decide which routes they fly and which airports they use, based on demand. We cannot define where the routes go. Within each airline’s economic development model, they decide where they will land. This is the dimension we have been working on.

Could we, for example, ban low-cost flights from Lisbon airport? It would help to relieve congestion at the airport.

I don’t think we can ban them, as we are in a liberalised economy.

Giving positive incentives to…

Turismo de Portugal, in conjunction with the regions, has been working with all airlines and all national airports to create conditions for air connectivity to benefit the whole country, to be ever greater and of greater value. We are entering strategic markets with ever greater added value. The boom in the North American market is already well known. All national airports are connected to the North American market. But we have been working in other markets, such as Asia, where we have two direct routes, one very close to Beijing and the other to Seoul. These are markets where we recognise a longer stay in the territory, higher spending and, therefore, market segments with greater added value. And we do this by working with the market, the airlines and coordinating with all airports.

We have this logic, which is that value creation will occur through the distribution of that value throughout the territory. To do this, we must increasingly work on other tourism products that allow us to innovate our value proposition in line with market demands.

Are you concerned about the ever-increasing difficulties at Lisbon airport?

We should all be concerned, of course. Concerned in the sense that this is obviously not the situation we would like to be in. The tourist experience begins long before they arrive in the country and, when they do arrive, a significant percentage of it begins at the airports. Ensuring that the experience and entry into a country runs as smoothly as possible is something that must always be a concern for us. So when this does not happen, it is naturally a cause for concern. We know that the Government has been dealing with the issue, we know that there are several aspects to take into account – with the entry into force of the new automatic entry system for people entering the Schengen area – but that does not mean much. It just means that we have to work harder to overcome the difficulties we are currently experiencing.

Do you feel that there is already a negative impact on tourists?

I feel that there is discomfort, particularly among the airlines themselves, regarding this situation. It is natural, but what we have to convey is that we are all working together to find the best solutions to quickly resolve the situation. We are not happy with the situation, quite the contrary. So we have to work to resolve this at all airports. Not just in Lisbon, but at all airports, so that they are welcoming spaces for tourists and the start of a good experience in the country, rather than a bad experience that could then mark their trip to Portugal.

If we want to build a country – and we do – that is characterised by working on added value rather than volume, we must improve the quality of the country in all its dimensions. And one of these, of course, has to do with its infrastructure.

The new airport will not be ready until 2037. That is a long time to put up with Portela in this situation…

Naturally, it would be better if it were sooner. And everything indicates that it may eventually be sooner than 2037, I hope. Lisbon airport has its capacity limitations, it obviously has difficulty growing in terms of rotations, in terms of movements. This means that there are very strong limitations on entering new markets that are strategic for Portugal, due to the difficulty of finding slots and space on the runway for this to happen, but this is something we are going to work on. Investment is planned so that there can be a slight increase in movements at Lisbon Airport during this period, which runs from today until the airport is ready.

We also have to work on the size of the aircraft that come in, because if they are larger, they bring in more passengers. We have to work on increasing the load factor of aircraft, i.e. increasing the occupancy rate of aircraft so that there is room for growth, particularly in markets that are strategic for us, and for that we need routes for that purpose. This is accompanied by work with other airports.

It is not necessary for all routes to come to Lisbon.

We have been working with the airports in Porto, Faro, Funchal and Ponta Delgada, which have the capacity to grow even further. Now, it is very much a question of increasingly intelligent management of the infrastructure, in this case Lisbon airport, through the investment that will be made, through process changes that will lead to an evolution in terms of passenger numbers. In fact, if you look at today’s figures, the number of passengers in Lisbon is higher than last year. If you had asked me 15 or 16 years ago…

Was this number of passengers possible?

Exactly. No one would have thought so. Fifteen or 20 years ago, I think it was said that the capacity limit was 16 million. Today, we are already at more than 30 million passengers. We cannot fail to take this seriously. It is indeed a limitation, we have to work as hard as possible on the infrastructure, we have to create conditions for it to increase movements slightly, taking into account the investments that can be made. We also have to work on the size of the aircraft, but it is clear that this size also has a lot to do with the space on the apron, so we have to manage the slots, the space on the apron and the capacity of the aircraft.