This post examines the Spanish tourist market in the Canary Islands. As we would expect, the Spanish (Peninsula) market is of considerable importance to the Canary Islands although, as Figure 1 shows, the Peninsula is a more important to the tourism of some islands more than others.
Figure 1: Importance of Spanish Tourists by Island (share of tourist arrivals)
In all cases, domestic tourism has declined in importance and has never been the largest tourist segment in any of the islands. One possible reason for the relatively low demand is that sun, sea and sand are available domestically. From Madrid, for example, the Costa Blanca is easily accessible by car in less than five hours.
Figure 2 shows how the domestic market has declined in absolute terms over the three years from August 2010 to August 2013. Whilst for Fuerteventura, the domestic market has not been particularly large, the drop of 30% recorded for Lanzarote from 2008/2009 represents a significant loss of tourism demand. As demand from the Peninsula is highly seasonal, the data is represented in moving annual average format.
Figure 2: Volumes of Spanish Tourists by Island
For now at least, the decline appears to have bottomed out and in the two larger markets (Tenerife and Gran Canaria) there are signs of a small increase in recent months.
Another possible reason for the decline in Peninsula tourists could be due to fares; airline ticket prices between the Peninsula and the Canaries are accused of being excessive, but does the data bear this out?
Figure 3 shows air fares between Madrid and three of the most popular foreign cities, along with Las Palmas.
Figure 3: Selected Air Fares from Madrid
Flight prices on Skyscanner, 12/11/2013
For Easter 2014 and one of the busiest weeks in summer, there is no evidence that prices between Madrid and the Canary Islands are significantly higher. London is consistently the cheapest route and also the one with most competition. As Las Palmas is the longest flight, we would expect the route to be cheapest in terms of cents per kilometre. However, given the small amount of competition compared to London the prices are not unreasonable.