Wednesday, November 18, 2015

Some Things In The Air: Or not

Like the weather is supposedly an obsession of the British, then flying is a Mallorcan obsession. Everyone's. For an island cast adrift in the Mediterranean it couldn't be anything other than an obsession. Yes there are ships, but ships don't move human mass in the way that aircraft do. Without planes, Mallorca would be sunk. Anyone remember the ash cloud?

PSOE, bless its coming-late-to-the-party heart, is to make connectivity an election pledge. Cajoled by Balearic socialists, Pedro Sánchez and PSOE national will apply a strategic plan which, they say, will compensate for the costs of insularity. Coming late to the party, why have they and other parties not thought to do likewise in the past?

President Armengol and her finance minister, Catalina Cladera, make repeated references to wishing there to be a redefinition of Mallorca and the Balearics in economic terms. The special regime that they talk about is an obscure topic for most of us, but inherent to it is, or should be, the appreciation of geographical disadvantages, ones which, for too long, have been ignored or swept into the background by the even more obscure discussions as to how the Balearics are financed.

A core element of this special regime should be a clear commitment to connectivity. The dependence upon it makes this essential. Quite what PSOE might dream up under its strategic plan (and there is, of course, no guarantee that it will form the next national government) is anyone's guess, but at the heart of it there needs to be an acknowledgement of the cost disadvantages for the island economy and of the imbalanced nature of connectivity. Palma airport breaks records each summer, and then partially closes in winter.

The island's political parties are once more making a plea to be involved with the management of Son Sant Joan and the airports of Menorca and Ibiza. They've been making this plea for years. At one time, it looked as if there was a commitment to allowing this (during Zapatero's time), but then, looming on the horizon came the process towards the Aena privatisation, a product, in part, of the need for government re-financing. 

A combination of a PSOE-led national government and the regime as it is at present in the Balearics might just bring about this ambition for some control of the airports through a coalition of what the regional government describes vaguely in terms of political, economic and social interests. How this might all sit with Aena is unknown. Here is an airports authority whose share value and profits have risen staggeringly. This isn't solely because of its Spanish business as, for instance, Luton Airport brings in a tidy sum as well, but the authority does very nicely thank you from the Spanish network, despite the number of loss-making airports within it.

One airport which doesn't make a loss, or anything like it, is Palma's. Saddled with little or no debt financing (thanks to historic European largesse) and buoyed by huge summer demand, Aena rakes in the airport's profits: it isn't so much a cash cow as an entire beef herd. Aena might not take kindly to any interference in this profit source, but it is worth remembering that the state still holds the majority of the shares, with Aena in a halfway house - part privatised but under the ultimate command of the national ministry for development.

Putting to one side Aena and a model of airport management that might make Balearic airports cheaper for airlines in winter, there is the issue of vulnerability. Not so long ago it was Spanair. Now, it's Air Berlin. Its decision to close the hub is no surprise. The airline has been losing money hand over fist for some five years. Erroneously described as low-cost, it has struggled to compete, while the hub strategy has been rendered outdated because of low-cost flights by German competitors direct to the mainland. Without drastic cuts, it would go bust.

Ultimately, and despite the loss of jobs and an impact on ground services, the Air Berlin decision will probably not prove harmful, but psychologically it's a blow for the airport and for Mallorca, raising as it does the fears that come with insularity and so much dependence on connectivity. And to this has to be added the peculiar case of Air Europa and the residents' discounts affair. The airline, Mallorca-based, has arrived at an arrangement whereby it will pay the national government 13 million euros which were allegedly obtained through fraudulent means. There are criticisms of the lack of explanation and transparency regarding this apparent settlement, while the national travel agencies association, which first blew the whistle, suggests that this is only a fraction of the amount. A criminal investigation, meanwhile, is continuing.

PSOE's strategic plan should be detailed. Mallorca might just depend upon it.

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