Abstract: The analysis presented in this paper is innovative, due to the lack of studies analysing how airlines compete in managing demand for domestic passenger air transport from mainland Spain to the Canary Islands. This research examines five Canary Island airports on 52 routes in order to explain the determinants of tourist air travel in this market. The regression analysis used the 2-stage least squares structural equation approach' with the implementation of instrumental variables in three equations: i) demand, ii) market share, and iii) price on each route. The results show that tourism in the Canary Island is very sensitive to income of the generating regions and prices of airline tickets.

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