Causality in direct air services and tourism demand

•Aims to isolate the two-way causal relationships between direct air services and international visitor flows.•Use theoretically and intuitively appealing instrumental variables.•In the study sample, levels of direct air services were endogenous with tourism demand in one direction but not the other.•Highlights the importance of considering attributes of air transport network in tourism demand studies. Unlike income or relative prices, air transport attributes and tourism demand on a given route can be endogenous. Using instrumental variables, this study attempted to account for the circular causality in estimating the effect of direct air service on tourism demand. Although we found evidence of endogeneity, the nature of the circular causation is context-specific; while direct air service can be regarded as an exogenous variable in one direction, it can have an endogenous relationship on the other. Findings emphasise the need to explicate information about the network nature of transportation and its endogenous relations with tourism.