It will be of absolutely no surprise to discover that last week a politician came out with something only partially linked to reality, but even so, what do we make of Biel and the Aena thing? B.B.B., Beleaguered Biel Barceló, had dragged Aena bigwigs (including its president) in for a chat. Things, Biel said afterwards, were fairly positive. Aena was listening to the government, which, for the record, comprised Biel, his oppo at tourism, Pilar Carbonell, and the Pons fellow from transport.
While Aena may have been listening to him (and them), it doesn't seem that they were listening to Aena. During the gathering, according to Biel, the airports authority had very kindly said that there will not be more flights per hour at Palma this summer. This, at any rate, was the first report. It was subsequently modified to Aena had said there won't be any increase this year, which was before Aena themselves realised that they had better speak up. They had said no such thing. They did not promise that there will not be more flights per hour this summer.
How was it that the different government representatives all appeared to have misheard what Aena had said? One guesses that the meeting was in Castellano, so possibly they were a bit slow on the uptake. But one doubts it. They do, after all, get enough practice with Castellano when going off to Madrid to harangue ministers over finance, residents' discounts and what have you. So what was the cause of the misunderstanding? Had Biel just imagined they'd said it, or what?
More peculiar than the apparent misreporting of Aena's words was the total silence from the massed ranks of the rest of the government. Yet, when Aena had first let it be known that more flights per hour were likely, you couldn't keep any of them from having prolonged rants, especially Biel. The increase would, more or less, mean the end of civilisation in Mallorca as we know it. Or it would at least lead to everything collapsing and no one being able to move because of the sheer volume of touristic humanity.
This time, though, not a dicky bird. Why was that, do you suppose? Was it a case of protecting Biel. With the police now hovering over the Més contracts and spying potential irregularities of the possibly corrupt variety, Biel is clinging to the political raft. It was better, therefore, for it to have appeared that Biel had extracted an Aena promise, and then keep mum when it emerged that he hadn't.
The silence, given the prospect of ever greater saturation of tourists, was even more surprising because for most of last week various authorities were taking it in turns to shut things down, like roads leading to beauty-spots and beaches. The way things are going, tourists appear destined to find their every attempt to make it to the coasts blocked by members of the local plods barring their way and brandishing access-denied notices. This of course assumes that there are any roads open that enable them to get as far as ones with road blocks. Yesterday, there weren't any open. Bloody cyclists all over the place and out for one massive bike ride across the island - all 6,000 or so of them.
Index for April 2017
Aena and flights at Palma - 30 April 2017
April start of the season - 1 April 2017
Aurora Picornell - 26 April 2017
Biel Barceló - 17 April 2017
Convair at the airport - 12 April 2017
Davallament - 13 April 2017
Environmental commitment - 20 April 2017
Expatriates - 25 April 2017
Fanny Tur - 9 April 2017
Holiday rentals - 7 April 2017, 18 April 2017, 22 April 2017, 29 April 2017
Jaume Garau and Més - 5 April 2017, 11 April 2017
Kelvin MacKenzie - 16 April 2017
Mediterranean culture - 15 April 2016, 21 April 2017
Palma auditorium - 3 April 2017
Palma, La Palma ... - 10 April 2017
Podemos and their bus - 24 April 2017
Pollensa villas' legality - 4 April 2017
Rules and traditions - 6 April 2017
Ruth Mateu (Més) resignation - 2 April 2017
Sex and Mallorca - 28 April 2017
Too many cars - 27 April 2017
Tourist information offices - 8 April 2017
Tourist tax - 19 April 2017
Wine exports to the USA - 29 April 2017
Zombies and Spanish defence - 23 April 2017
Showing posts with label AENA. Show all posts
Showing posts with label AENA. Show all posts
Sunday, April 30, 2017
Saturday, March 25, 2017
Flights Just Keep On Increasing
Aena has announced that from Sunday, 26 March until 28 October, airlines' programmes provide for almost 29 million passenger places. This doesn't mean that there will be this number of passengers - the figure is for available places - but one needs to consider some context. For the same "summer" period last year, the provision was 26.4 million, a figure which was only slightly higher than the number of passengers who actually passed through the airport during the whole of the year (26.25 million).
When a similar announcement was made last year, the increase in places was over 16%. In the end, actual occupancy was around 80% of the total, but the announcement was enough to set the alarm bells of the "saturationists" ringing. The increased places this year won't all be sold, but whatever the sales may be, it seems quite possible that for the end-March to end-October period, the number of passengers for the whole of last year will be exceeded.
The increase will mainly apply to the spring and autumn months. In fact, the provisions for May are not out of the ordinary. For April and June they are. Easter is a major factor with the former. School holidays in some German states are a key factor in June. So much for German families opting to go elsewhere. But with more routes operating this summer (47 more), there will be more passengers in high summer as well.
However one looks at it, there are going to be ever more tourists this summer. An expectation made last year that the 27 million passengers' figure will be topped for the whole of 2017 can be discarded. It will be many more.
On the one hand, more tourists in the lower months of the summer is very good news. But on the other hand, the political one (and social one), the news is less good. Biel Barceló was talking recently, and somewhat strangely, about fewer numbers of summer tourists. He was plainly wrong, perhaps misinterpreting, as others had, what Tui had said in Berlin. For Barceló, being able to say this was to his political advantage. Now, though, he is going to face the ever greater ire of Podemos and some in his own party (Més). The pressure groups - GOB, Terraferida, etc. - will have a field day. The season hasn't started, but saturation is already with us, and this summer it will be saturation-plus.
The government reaction so far has been to say that an increase in high-summer flights is "unacceptable". There is no room for more tourists in high summer. One can anticipate there being stronger reactions.
Where does it end? It doesn't, it seems. Aena has given mixed messages about increasing flight capacity - one minute it will increase, the other it won't - and precisely why it is investing so heavily in the airport. The belief is that the capacity will rise to eighty flights per hour at some point. To cope with more routes and flights (14,000 more) this summer, the capacity will need to be increased. In fact, the airport's director has said that 79 flights can be dealt with. They may well need to be.
Even without this to consider, the fact that this summer's passenger (and flight) numbers are on the rise again will only reinforce demands for airport co-management.
When a similar announcement was made last year, the increase in places was over 16%. In the end, actual occupancy was around 80% of the total, but the announcement was enough to set the alarm bells of the "saturationists" ringing. The increased places this year won't all be sold, but whatever the sales may be, it seems quite possible that for the end-March to end-October period, the number of passengers for the whole of last year will be exceeded.
The increase will mainly apply to the spring and autumn months. In fact, the provisions for May are not out of the ordinary. For April and June they are. Easter is a major factor with the former. School holidays in some German states are a key factor in June. So much for German families opting to go elsewhere. But with more routes operating this summer (47 more), there will be more passengers in high summer as well.
However one looks at it, there are going to be ever more tourists this summer. An expectation made last year that the 27 million passengers' figure will be topped for the whole of 2017 can be discarded. It will be many more.
On the one hand, more tourists in the lower months of the summer is very good news. But on the other hand, the political one (and social one), the news is less good. Biel Barceló was talking recently, and somewhat strangely, about fewer numbers of summer tourists. He was plainly wrong, perhaps misinterpreting, as others had, what Tui had said in Berlin. For Barceló, being able to say this was to his political advantage. Now, though, he is going to face the ever greater ire of Podemos and some in his own party (Més). The pressure groups - GOB, Terraferida, etc. - will have a field day. The season hasn't started, but saturation is already with us, and this summer it will be saturation-plus.
The government reaction so far has been to say that an increase in high-summer flights is "unacceptable". There is no room for more tourists in high summer. One can anticipate there being stronger reactions.
Where does it end? It doesn't, it seems. Aena has given mixed messages about increasing flight capacity - one minute it will increase, the other it won't - and precisely why it is investing so heavily in the airport. The belief is that the capacity will rise to eighty flights per hour at some point. To cope with more routes and flights (14,000 more) this summer, the capacity will need to be increased. In fact, the airport's director has said that 79 flights can be dealt with. They may well need to be.
Even without this to consider, the fact that this summer's passenger (and flight) numbers are on the rise again will only reinforce demands for airport co-management.
Saturday, February 25, 2017
Mallorca's Saturated Skies
It is not just Mallorca's roads, streets and beaches that are saturated with tourists, so are the island's skies, and these are due to be more jammed than ever this summer courtesy of a 20% increase in air capacity. One uses the word "capacity" advisedly, because capacity is already stretched to the limits, and as a result tourism minister Biel Barceló is absolutely furious with Aena.
He isn't the only one who should be. The tipping-point with visitor numbers has been edging ever closer. One fears the edge will be reached this summer. The additional numbers being spoken of verge on the preposterous.
Aena is scheduling a landing or a taking-off every 45 seconds. The hourly capacity is to rise from the current 66 to 80. That gives you the 20% increase (actually 21.2%). The logic of such an increase is that passenger numbers, which were a record 26 million last year, will be well over the 30 million mark this year. There had been talk of one million more passengers for 2017, not of five or six million more.
Barceló's anger stems from the fact that there had been no consultation about this increase. While there will be those who believe the more the merrier when it comes to ever greater tourist numbers, there will be plenty who do not, and Barceló is right to say that a major increase in volume has serious ramifications for roads, the environment, emergency services, waste management, health services. Everything. There again, one might suggest that he would say all this. Politically, he can't afford to be presiding as tourism minister over ever greater numbers, given the "saturation" and sustainability debates and arguments.
It is in fact highly unlikely that the increased numbers will be in the order of five or six million. It serves Barceló, Podemos and GOB well to suggest that this will be the case, but one is talking here about maximum capacity at specific times. Even so, there will be a rise (and perhaps a significant one) while there is also the distinct sense of Aena totally disregarding the island's own capacity in the pursuit of ever greater profit. And when one refers to Mallorca's capacity, where exactly might these greater numbers be staying? Not hotels because they're pretty much booked out as it is in high summer.
The Aena announcement simply adds further fuel to the argument that there should be local co-management (and so therefore greater control) of airports and ports. And there is an important point to make about these. The ports are run by the state. The Balearic Ports Authority, which is the regional division of the State Ports, doesn't generate enormous profit, and much of what profit it does make is ploughed back in the form of investment. Aena, on the other hand, makes colossal money from Palma and the other two Balearic airports - over 1,100 million euros per annum from airport taxes.
There will be even more local anger because of the coincidental announcement of Aena's figures for last year. Its profit increased by almost 40%. The consolidated net profit of more than 1,100 million euros (a figure that is a coincidence in itself given the revenue generated from the Balearics) equates to some 30% of consolidated revenue - a staggering return.
To return to the increase in hourly capacity, a point also needs to be made about safety. Air-traffic controllers in Palma were last summer saying that at peak times (typically weekends in high summer), they were having to deal with well over 66 planes an hour. They were warning that safety was at risk of being compromised and that their own ability to handle such volume was being stretched to the limit. Aena needs to give some explanations and assurances. Barceló and the government have requested a meeting with Aena's directors. That's likely to be a feisty affair.
He isn't the only one who should be. The tipping-point with visitor numbers has been edging ever closer. One fears the edge will be reached this summer. The additional numbers being spoken of verge on the preposterous.
Aena is scheduling a landing or a taking-off every 45 seconds. The hourly capacity is to rise from the current 66 to 80. That gives you the 20% increase (actually 21.2%). The logic of such an increase is that passenger numbers, which were a record 26 million last year, will be well over the 30 million mark this year. There had been talk of one million more passengers for 2017, not of five or six million more.
Barceló's anger stems from the fact that there had been no consultation about this increase. While there will be those who believe the more the merrier when it comes to ever greater tourist numbers, there will be plenty who do not, and Barceló is right to say that a major increase in volume has serious ramifications for roads, the environment, emergency services, waste management, health services. Everything. There again, one might suggest that he would say all this. Politically, he can't afford to be presiding as tourism minister over ever greater numbers, given the "saturation" and sustainability debates and arguments.
It is in fact highly unlikely that the increased numbers will be in the order of five or six million. It serves Barceló, Podemos and GOB well to suggest that this will be the case, but one is talking here about maximum capacity at specific times. Even so, there will be a rise (and perhaps a significant one) while there is also the distinct sense of Aena totally disregarding the island's own capacity in the pursuit of ever greater profit. And when one refers to Mallorca's capacity, where exactly might these greater numbers be staying? Not hotels because they're pretty much booked out as it is in high summer.
The Aena announcement simply adds further fuel to the argument that there should be local co-management (and so therefore greater control) of airports and ports. And there is an important point to make about these. The ports are run by the state. The Balearic Ports Authority, which is the regional division of the State Ports, doesn't generate enormous profit, and much of what profit it does make is ploughed back in the form of investment. Aena, on the other hand, makes colossal money from Palma and the other two Balearic airports - over 1,100 million euros per annum from airport taxes.
There will be even more local anger because of the coincidental announcement of Aena's figures for last year. Its profit increased by almost 40%. The consolidated net profit of more than 1,100 million euros (a figure that is a coincidence in itself given the revenue generated from the Balearics) equates to some 30% of consolidated revenue - a staggering return.
To return to the increase in hourly capacity, a point also needs to be made about safety. Air-traffic controllers in Palma were last summer saying that at peak times (typically weekends in high summer), they were having to deal with well over 66 planes an hour. They were warning that safety was at risk of being compromised and that their own ability to handle such volume was being stretched to the limit. Aena needs to give some explanations and assurances. Barceló and the government have requested a meeting with Aena's directors. That's likely to be a feisty affair.
Wednesday, January 11, 2017
The Contradiction Of Airport Policy
Palma's Son Sant Joan airport topped 26 million passengers last year. It was a record. Roughly another million may be added this year. Another record. And when the figures are released month by month this year, which they are in laborious detail showing percentage rises for this, that and another thing, the mongers of saturation doom will assure us that the island has reached and passed the point of touristic redemption. If only the numbers arriving at the airport could be limited, they will wail, while wiping away the tears of non-sustainability.
Something curious happened on Monday. One says curious, but it wasn't so curious to hear a Balearic minister calling for a cut in airport charges. This demand has been made before. A justification of bringing about an increase in Balearic competitiveness also wasn't curious. Lower costs (in theory) for the travelling public and freight, and competitiveness is gained. But it does rather depend on which part of the public is doing the travelling and what the freight is for.
What was curious was when the minister, Marc Pons (transport), referred to boosting Balearic competitiveness as a tourist destination and to promoting additional traffic. Did we hear this right? He wishes the records to keep on being broken and thus intensify the cries of the saturation mongers?
Pons may of course had in mind the promotion of more traffic for the off-season. But if he did, then he is still firmly in saturation territory. There may be (are) certain members of the Balearic government, its president for example, who have come up with the ludicrous notion that summer visitors can somehow be shifted to the winter, but that is not about to happen. More visitors in winter mean more visitors, period. In any event, he was also calling for an increase in the off-season tariff discount from 20 to 25%.
Although one struggles to appreciate how much difference a 2.6% reduction in charges over the next five years, which is what he was calling for, would really make, he clearly believes that it would make a difference: greater competitiveness and more people. He has an ally in this regard in the form of the National Competition Commission. It has been demanding that Aena drop its charges by two per cent and it has been at loggerheads with Aena for a while. Basically, the commission thinks the airport authority overcharges, while there is also the issue of accounting for airport operations, with Aena being required to fully adopt a dual-till system by 2018.
What Pons was really driving at was the fact that Palma and the other two Balearic airports each year generate more than 1,150 million euros of airport taxes that go to Aena and which have no benefit for the Balearics. His 2.6% reduction would save the travelling public roughly 30 million euros a year; this public being both resident and tourist. But while he couched all this in terms of greater competitiveness and more employment, the bottom line - once more - is the desire for airport co-management, something that has always been remote and becomes ever more remote if the national government decreases its shareholding in Aena, which it has suggested that it will do. The consequence of this would be that the state would no longer be the majority shareholder, albeit that it would retain a significant holding (probably 40%).
But where this becomes ever more curious is in the apparent contradiction with what has been said in respect of the so-called tourism saturation. Biel Barceló is not alone in having explained that because the regional government does not co-manage the airports, it cannot adjust the number of tourists arriving. The implication is that were there to be co-management, then the government would seek to reduce flights.
Whether it would be able to is a wholly different issue. The national government and Europe would have its say, and the competition commission certainly wouldn't look upon it favourably. Even if there were to be a policy of reduction, courtesy of co-management, it would only take a change of regional government for the policy to be reversed. The Partido Popular, which has been as much in favour of co-management as the left (Jaume Matas believed he was getting somewhere on this with the Zapatero administration back in 2005), would doubtless free things up again. Apart from anything else, this would all cause great uncertainty for scheduling.
Fundamentally though, how would such a policy square with the Pons advocacy of greater competitiveness and greater traffic through a reduction in airport taxes? On the one hand there is talk of limiting arrivals; on the other there is talk of their increasing. It's baffling. Securing a better deal for passengers is an admirable aim, and the additional tourists would no doubt be grateful. Curious.
Something curious happened on Monday. One says curious, but it wasn't so curious to hear a Balearic minister calling for a cut in airport charges. This demand has been made before. A justification of bringing about an increase in Balearic competitiveness also wasn't curious. Lower costs (in theory) for the travelling public and freight, and competitiveness is gained. But it does rather depend on which part of the public is doing the travelling and what the freight is for.
What was curious was when the minister, Marc Pons (transport), referred to boosting Balearic competitiveness as a tourist destination and to promoting additional traffic. Did we hear this right? He wishes the records to keep on being broken and thus intensify the cries of the saturation mongers?
Pons may of course had in mind the promotion of more traffic for the off-season. But if he did, then he is still firmly in saturation territory. There may be (are) certain members of the Balearic government, its president for example, who have come up with the ludicrous notion that summer visitors can somehow be shifted to the winter, but that is not about to happen. More visitors in winter mean more visitors, period. In any event, he was also calling for an increase in the off-season tariff discount from 20 to 25%.
Although one struggles to appreciate how much difference a 2.6% reduction in charges over the next five years, which is what he was calling for, would really make, he clearly believes that it would make a difference: greater competitiveness and more people. He has an ally in this regard in the form of the National Competition Commission. It has been demanding that Aena drop its charges by two per cent and it has been at loggerheads with Aena for a while. Basically, the commission thinks the airport authority overcharges, while there is also the issue of accounting for airport operations, with Aena being required to fully adopt a dual-till system by 2018.
What Pons was really driving at was the fact that Palma and the other two Balearic airports each year generate more than 1,150 million euros of airport taxes that go to Aena and which have no benefit for the Balearics. His 2.6% reduction would save the travelling public roughly 30 million euros a year; this public being both resident and tourist. But while he couched all this in terms of greater competitiveness and more employment, the bottom line - once more - is the desire for airport co-management, something that has always been remote and becomes ever more remote if the national government decreases its shareholding in Aena, which it has suggested that it will do. The consequence of this would be that the state would no longer be the majority shareholder, albeit that it would retain a significant holding (probably 40%).
But where this becomes ever more curious is in the apparent contradiction with what has been said in respect of the so-called tourism saturation. Biel Barceló is not alone in having explained that because the regional government does not co-manage the airports, it cannot adjust the number of tourists arriving. The implication is that were there to be co-management, then the government would seek to reduce flights.
Whether it would be able to is a wholly different issue. The national government and Europe would have its say, and the competition commission certainly wouldn't look upon it favourably. Even if there were to be a policy of reduction, courtesy of co-management, it would only take a change of regional government for the policy to be reversed. The Partido Popular, which has been as much in favour of co-management as the left (Jaume Matas believed he was getting somewhere on this with the Zapatero administration back in 2005), would doubtless free things up again. Apart from anything else, this would all cause great uncertainty for scheduling.
Fundamentally though, how would such a policy square with the Pons advocacy of greater competitiveness and greater traffic through a reduction in airport taxes? On the one hand there is talk of limiting arrivals; on the other there is talk of their increasing. It's baffling. Securing a better deal for passengers is an admirable aim, and the additional tourists would no doubt be grateful. Curious.
Tuesday, May 31, 2016
Airport Co-Management Is Flying Again
In late August 2006 the then president of the Balearics, Jaume Matas, met José Luis Rodríguez Zapatero, the Spanish prime minister. The location was the VIP lounge at Palma's Son Sant Joan airport. Zapatero had stopped to have a meeting with Matas before going on to the Marivent Palace, where he was to be received by King Juan Carlos. The choice of the airport lounge was more than just a simple convenience. It was also symbolic. Matas wanted to talk to Zapatero about airport management.
Almost eighteen months previously, Matas had participated in a form of summit. The outcome of this, named after the setting, was the Murcia Declaration. It consisted of common areas of interest between the five Spanish regions in the Mediterranean Basin: Andalusia, Catalonia, Murcia, Valencia and the Balearics. Those who took part were three Partido Popular presidents - Matas and those of Murcia and Valencia - and the leaders of the PP in Andalusia and Catalonia. A key item on their agenda and which was to be included in that declaration had to do with airport management.
At the meeting with Zapatero, the former prime minister promised to study the Matas proposals. Matas himself believed that the meeting had been very positive. Here, it was believed at the time, was movement towards co-management of Balearic airports: private and public co-management, with the public element being the regional government.
The significance of the Zapatero meeting should not be lost on those who are today calling for airport co-management. This had been a PP regional president asking a PSOE prime minister. The roles are currently reversed: there is a PSOE regional president and a PP premier.
Nothing was to come of the meeting. Zapatero, returned for a second time as premier, was to run into the storm of economic crisis. As his government sought to spend its way out of what he initially denied was a crisis, Spain's financial situation deteriorated. One of the solutions was to consider privatisation. The national airports' network, Aena, was to eventually go under the hammer: 49% of it at any rate. It created a public-private arrangement but not one that Matas and others (the Canaries had also been interested) had sought. Regional governments were to not get their wishes in having a share of their airports' pies.
Airport co-management is back on the agenda. In truth it hasn't been off it for many years. The Bauzá PP regime never seriously spoke about it, but the Matas PP administration had, as also had the PSOE-led governments of Francesc Antich. The talk now, where the regional government is concerned, runs up against a sizable obstacle the Rajoy government, which has never shown any interest in co-management, only in the Aena privatisation.
Francina Armengol was in Madrid last week. For some observers it was clear what her main objective had been: less one of showing support for Pedro Sánchez and more one of again pressing the case for airport co-management. She may have had a greater priority, but a Sánchez PSOE-led government, it would be hoped in the Balearics, would be even more amenable than Zapatero's had once seemed to have been.
In April the Balearic parliament passed a motion calling for co-management. It was supported by all parties, as was a statement demanding that the current 51% state shareholding in Aena should not be reduced. Where the parties disagreed, with the PP and Ciudadanos doing the disagreeing, was a further statement calling for the national government to consider reversing the privatisation of Aena.
A month earlier, the government in the Canary Islands had been paving the way for a legal challenge to force co-management of the airports on those islands. It had already unsuccessfully sought to block the partial privatisation of Aena in the courts.
Going back to the time of last December's general election, the Congress lead candidate for Més, Antoni Verger, had been calling for a reversal of the privatisation. A representative of Balearic nationalism, he was coming from a similar perspective as the government in Canaries: it is run by the Coalición Canaria, also nationalist but not, unlike Més, left-wing.
Co-management is not and has not been solely an ambition of the left. Different parts of the political spectrum, especially in the two archipelagos - Balearics and Canaries - have seen the potential value and not only in terms of possible revenue. Verger, who has now found himself back in the frame as a potential Congress deputy, believes that it would bring advantages, such as a reduction in wintertime airport tariffs.
The co-management debate is very much alive again. As part of a new economic regime for the Balearics, to which Sánchez in particular might be well disposed, it's time might be coming. But what might it mean for Aena shareholders whose returns have been soaring?
Footnote: Of course, where Matas and the airports were concerned, knowing what we now know ...
Index for May 2016
Ada Colau and tourism - 5 May 2016
Airport co-management - 31 May 2016
Attitudes towards tourism - 25 May 2016
Blue Flags in Mallorca - 10 May 2016
Cities of Mallorca - 15 May 2016
Cruise ships - 7 May 2016, 24 May 2016
Cycling and anger - 2 May 2016
Drunken tourists - 3 May 2016
Family tourism - 6 May 2016
Holiday rentals regulation - 21 May 2016
Hotel places' limits - 28 May 2016
Lawyers and Nóos trial - 23 May 2016
Mallorca and Western Mediterranean islands - 12 May 2016
Mining in Mallorca - 1 May 2016
Overcrowding in Mallorca - 17 May 2016
Place names - 13 May 2016, 20 May 2016
Podemos, Balearics, general election - 9 May 2016, 11 May 2016, 16 May 2016, 18 May 2016. 30 May 2016
Retailer employment and salaries - 26 May 2016
Sant Joan Pelós, Pollensa - 29 May 2016
Sobirania per a les Illes - 27 May 2016
Soller Es Firó - 8 May 2016
Spain election and the Balearics - 4 May 2016, 22 May 2016
Tax cases: Cuéntame cómo pasó - 19 May 2016
Tourist cars: ban? - 14 May 2016
Almost eighteen months previously, Matas had participated in a form of summit. The outcome of this, named after the setting, was the Murcia Declaration. It consisted of common areas of interest between the five Spanish regions in the Mediterranean Basin: Andalusia, Catalonia, Murcia, Valencia and the Balearics. Those who took part were three Partido Popular presidents - Matas and those of Murcia and Valencia - and the leaders of the PP in Andalusia and Catalonia. A key item on their agenda and which was to be included in that declaration had to do with airport management.
At the meeting with Zapatero, the former prime minister promised to study the Matas proposals. Matas himself believed that the meeting had been very positive. Here, it was believed at the time, was movement towards co-management of Balearic airports: private and public co-management, with the public element being the regional government.
The significance of the Zapatero meeting should not be lost on those who are today calling for airport co-management. This had been a PP regional president asking a PSOE prime minister. The roles are currently reversed: there is a PSOE regional president and a PP premier.
Nothing was to come of the meeting. Zapatero, returned for a second time as premier, was to run into the storm of economic crisis. As his government sought to spend its way out of what he initially denied was a crisis, Spain's financial situation deteriorated. One of the solutions was to consider privatisation. The national airports' network, Aena, was to eventually go under the hammer: 49% of it at any rate. It created a public-private arrangement but not one that Matas and others (the Canaries had also been interested) had sought. Regional governments were to not get their wishes in having a share of their airports' pies.
Airport co-management is back on the agenda. In truth it hasn't been off it for many years. The Bauzá PP regime never seriously spoke about it, but the Matas PP administration had, as also had the PSOE-led governments of Francesc Antich. The talk now, where the regional government is concerned, runs up against a sizable obstacle the Rajoy government, which has never shown any interest in co-management, only in the Aena privatisation.
Francina Armengol was in Madrid last week. For some observers it was clear what her main objective had been: less one of showing support for Pedro Sánchez and more one of again pressing the case for airport co-management. She may have had a greater priority, but a Sánchez PSOE-led government, it would be hoped in the Balearics, would be even more amenable than Zapatero's had once seemed to have been.
In April the Balearic parliament passed a motion calling for co-management. It was supported by all parties, as was a statement demanding that the current 51% state shareholding in Aena should not be reduced. Where the parties disagreed, with the PP and Ciudadanos doing the disagreeing, was a further statement calling for the national government to consider reversing the privatisation of Aena.
A month earlier, the government in the Canary Islands had been paving the way for a legal challenge to force co-management of the airports on those islands. It had already unsuccessfully sought to block the partial privatisation of Aena in the courts.
Going back to the time of last December's general election, the Congress lead candidate for Més, Antoni Verger, had been calling for a reversal of the privatisation. A representative of Balearic nationalism, he was coming from a similar perspective as the government in Canaries: it is run by the Coalición Canaria, also nationalist but not, unlike Més, left-wing.
Co-management is not and has not been solely an ambition of the left. Different parts of the political spectrum, especially in the two archipelagos - Balearics and Canaries - have seen the potential value and not only in terms of possible revenue. Verger, who has now found himself back in the frame as a potential Congress deputy, believes that it would bring advantages, such as a reduction in wintertime airport tariffs.
The co-management debate is very much alive again. As part of a new economic regime for the Balearics, to which Sánchez in particular might be well disposed, it's time might be coming. But what might it mean for Aena shareholders whose returns have been soaring?
Footnote: Of course, where Matas and the airports were concerned, knowing what we now know ...
Index for May 2016
Ada Colau and tourism - 5 May 2016
Airport co-management - 31 May 2016
Attitudes towards tourism - 25 May 2016
Blue Flags in Mallorca - 10 May 2016
Cities of Mallorca - 15 May 2016
Cruise ships - 7 May 2016, 24 May 2016
Cycling and anger - 2 May 2016
Drunken tourists - 3 May 2016
Family tourism - 6 May 2016
Holiday rentals regulation - 21 May 2016
Hotel places' limits - 28 May 2016
Lawyers and Nóos trial - 23 May 2016
Mallorca and Western Mediterranean islands - 12 May 2016
Mining in Mallorca - 1 May 2016
Overcrowding in Mallorca - 17 May 2016
Place names - 13 May 2016, 20 May 2016
Podemos, Balearics, general election - 9 May 2016, 11 May 2016, 16 May 2016, 18 May 2016. 30 May 2016
Retailer employment and salaries - 26 May 2016
Sant Joan Pelós, Pollensa - 29 May 2016
Sobirania per a les Illes - 27 May 2016
Soller Es Firó - 8 May 2016
Spain election and the Balearics - 4 May 2016, 22 May 2016
Tax cases: Cuéntame cómo pasó - 19 May 2016
Tourist cars: ban? - 14 May 2016
Saturday, December 12, 2015
Yet More On Tourist Taxes
The regional government has asked the citizens how they would prefer the sustainable tourism tax to be spent. An online poll revealed an 80% preference for environmental protection and conservation, a result which comes as no surprise. Depending on which options the citizens are presented with, then the citizens - more often than not - will reply with an answer that might have been hoped for: among certain elements of the government at any rate.
Were the government to follow this preference, then the tax would become an eco-tax, but as we have been informed, by the finance minister, it is not an eco-tax: that was something they did thirteen years ago. This tax is different. And the government still isn't clear as to how it intends spending it.
One person who has made his views clear is the prime minister. Mariano Rajoy is not in favour of eco-taxes or other taxes directed at tourists. As pointed out previously, such a view avoids the fact that he and his government increased taxes - indirect ones - aimed at tourists: the tourist rate of IVA (VAT). This was, in a sense, a national tourist tax, but of course no one ever referred to it as such.
It isn't totally beyond the bounds of possibility that a new national government might pursue a national tax, though this would almost certainly require Podemos being at the centre of the next government's policy-making, which it may not be. Such a move would be interesting in that it could well end up being challenged in law because of regions' statutory rights over tourism policy. Hypothetical though this might be, tourist taxes are being talked up (or down) in different parts of the country. The Canaries had dismissed a tax, but the idea still keeps cropping up. The city of Seville is said to be looking at one. The Valencia region may yet introduce one.
In other tax developments, the Més lead candidate for Congress, Antoni Verger, has been speaking again about his party's wishes for air travel, a component of which would be local management of airports through which, he believes, it would be possible to reduce the airports' taxes on airlines, i.e. the charges for landing rights and handling. Rather more significant, though, is the powerful lobby of Europe's five largest airline concerns. Air France-KLM, IAG, the Lufthansa Group, Ryanair and easyJet are calling on the European Commission to act "immediately" in taking concrete measures to reduce airport taxes. They argue that, while these charges have increased by an average of two-thirds in the past ten years, the supply side (i.e. the airlines) has been lowering its charges, in other words its ticket prices.
The airlines' lobby complains about "airport monopolies on a grand scale", which is something that can be applied to Aena, and these leading airlines believe that a mandated lowering of taxes would create employment and contribute to general economic growth. One hesitates to suggest that the lobby's intervention will lead to significant cuts, as there is the Spanish example to bear in mind: the National Competition Commission has forced a reduction in taxes for next year, but it is certainly not great. But the fact that the matter has been placed on the Brussels agenda might result in something more substantial, which could only be of benefit locally in Mallorca, where Palma has the third highest (all year) charges in the country.
Were the government to follow this preference, then the tax would become an eco-tax, but as we have been informed, by the finance minister, it is not an eco-tax: that was something they did thirteen years ago. This tax is different. And the government still isn't clear as to how it intends spending it.
One person who has made his views clear is the prime minister. Mariano Rajoy is not in favour of eco-taxes or other taxes directed at tourists. As pointed out previously, such a view avoids the fact that he and his government increased taxes - indirect ones - aimed at tourists: the tourist rate of IVA (VAT). This was, in a sense, a national tourist tax, but of course no one ever referred to it as such.
It isn't totally beyond the bounds of possibility that a new national government might pursue a national tax, though this would almost certainly require Podemos being at the centre of the next government's policy-making, which it may not be. Such a move would be interesting in that it could well end up being challenged in law because of regions' statutory rights over tourism policy. Hypothetical though this might be, tourist taxes are being talked up (or down) in different parts of the country. The Canaries had dismissed a tax, but the idea still keeps cropping up. The city of Seville is said to be looking at one. The Valencia region may yet introduce one.
In other tax developments, the Més lead candidate for Congress, Antoni Verger, has been speaking again about his party's wishes for air travel, a component of which would be local management of airports through which, he believes, it would be possible to reduce the airports' taxes on airlines, i.e. the charges for landing rights and handling. Rather more significant, though, is the powerful lobby of Europe's five largest airline concerns. Air France-KLM, IAG, the Lufthansa Group, Ryanair and easyJet are calling on the European Commission to act "immediately" in taking concrete measures to reduce airport taxes. They argue that, while these charges have increased by an average of two-thirds in the past ten years, the supply side (i.e. the airlines) has been lowering its charges, in other words its ticket prices.
The airlines' lobby complains about "airport monopolies on a grand scale", which is something that can be applied to Aena, and these leading airlines believe that a mandated lowering of taxes would create employment and contribute to general economic growth. One hesitates to suggest that the lobby's intervention will lead to significant cuts, as there is the Spanish example to bear in mind: the National Competition Commission has forced a reduction in taxes for next year, but it is certainly not great. But the fact that the matter has been placed on the Brussels agenda might result in something more substantial, which could only be of benefit locally in Mallorca, where Palma has the third highest (all year) charges in the country.
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.
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.
Thursday, October 01, 2015
Feudalism: Alive and kicking in Mallorca
After King Jaume I and his not so merry men had finished slaughtering much of the population of Mallorca following the thirteenth-century conquest, they ran up against a slight problem. Land was all well and good, but less so if there wasn't anyone to work it. The scale of the slaughter suggests that half the population of the island - put at some 50,000 - was wiped out. Of those who survived, the majority were Muslim converts. Otherwise, there were still some Christians, descendants of the population at the time of the Muslim occupation three centuries before.
In terms of society, the story of the immediate aftermath of the conquest can be styled as a combination of slavery and feudalism. The slaves were the survivors of the conquest, whose numbers, limited as they were, needed to be added to by inward migration, principally from Catalonia, for which incentives of privileges were granted. Privileges or not, the new Mallorcan workforce was subject to the organisational system - Jaume's system of feudalism.
There wasn't one definitive system of feudalism in Europe, but the variants followed a basic principle usually attributed to French nobility, e.g. William the Conqueror. It was a system of privileges, at the heart of which were rights to land extended from above to those below - as in lord to vassal, for example - and which involved a form of mutual protection: the lord would protect his vassal, and the vassal would fight for the lord.
Feudalism is generally considered to be a system of mediaeval times, and indeed its practice in Europe had largely disappeared by the fifteenth century. In Spain, on the other hand - or more accurately in the lands of the Aragon crown - the system of feudal barony, a hangover from Jaume, wasn't to be ended until the early nineteenth century and even then, though legal rights were abolished, property rights weren't.
Earlier this year, the heirs of the Marquis de la Romana informed owners of 125 properties, such as those in Paguera for example, that the "alou" ("alodio" in Spanish) was still applicable. This is a charge payable on the transfer of ownership of a property, and this alou goes right back to the days of Jaume I: it is a mediaeval tax, founded on the principles of Jaume's feudal system.
Under a Balearic law of 2010 the alou was addressed, and ultimate landowners, almost invariably descendants in some form or another of those who engaged in the land grab and distribution that Jaume had facilitated in the thirteenth century, were given five years to renew the alou. Those who didn't wish to simply had to inform the Land Registry, and the tax - hugely anachronistic that it was - would no longer be applicable.
At the time this law was introduced, the president of the Balearic Academy of Jurisprudence explained that it had served a useful function - in the thirteenth century. It was a legal concept linked to the conquest but also to the need for repopulation. But it was, nevertheless, a legal concept that was almost 800 years old.
The law was expected to have seen the withdrawal of the alou in 2013, and there were owners who decided to scrap it. But not all. Later that year, a couple, Xus Sastre and his wife Beatrix, won a court battle after they had been pursued for the payment of 2% alou for the purchase of a house in Es Pil-lari in Palma. The demand, which amounted to 1,800 euros, came from the Marquise de Campo Franco. The couple argued that they had never heard of the tax, though when it came to formalising the purchase, a notary observed that there was a freehold but advised them that the alou would not be charged, as no one bothered demanding it.
The couple, though they won the court case, took the matter further. They raised a petition through Change.org for the eradication of this example of feudalism that had no place in a democracy. How could standards of the thirteenth century still be allowed to apply? The Romanas and the Campo Francos would doubtless argue that they could apply quite easily.
The Més party, though, asked the same question. At the end of 2013, the petition having raised 12,000 signatures, a Més parliamentary deputy said that his party would seek to have the alou abolished for good. It was a "feudal anachronism", and the 2010 law hadn't gone far enough. But if Més were to now introduce a law (and one would think that they and especially Podemos would do so), it would be too late for the airports authority Aena. A court has decided that it must pay an alou of 70,840 euros for having put to use land that was expropriated at Son Sant Joan airport in the 1960s.
Jaume I's legacy is great, and it lives on in some most peculiar ways.
In terms of society, the story of the immediate aftermath of the conquest can be styled as a combination of slavery and feudalism. The slaves were the survivors of the conquest, whose numbers, limited as they were, needed to be added to by inward migration, principally from Catalonia, for which incentives of privileges were granted. Privileges or not, the new Mallorcan workforce was subject to the organisational system - Jaume's system of feudalism.
There wasn't one definitive system of feudalism in Europe, but the variants followed a basic principle usually attributed to French nobility, e.g. William the Conqueror. It was a system of privileges, at the heart of which were rights to land extended from above to those below - as in lord to vassal, for example - and which involved a form of mutual protection: the lord would protect his vassal, and the vassal would fight for the lord.
Feudalism is generally considered to be a system of mediaeval times, and indeed its practice in Europe had largely disappeared by the fifteenth century. In Spain, on the other hand - or more accurately in the lands of the Aragon crown - the system of feudal barony, a hangover from Jaume, wasn't to be ended until the early nineteenth century and even then, though legal rights were abolished, property rights weren't.
Earlier this year, the heirs of the Marquis de la Romana informed owners of 125 properties, such as those in Paguera for example, that the "alou" ("alodio" in Spanish) was still applicable. This is a charge payable on the transfer of ownership of a property, and this alou goes right back to the days of Jaume I: it is a mediaeval tax, founded on the principles of Jaume's feudal system.
Under a Balearic law of 2010 the alou was addressed, and ultimate landowners, almost invariably descendants in some form or another of those who engaged in the land grab and distribution that Jaume had facilitated in the thirteenth century, were given five years to renew the alou. Those who didn't wish to simply had to inform the Land Registry, and the tax - hugely anachronistic that it was - would no longer be applicable.
At the time this law was introduced, the president of the Balearic Academy of Jurisprudence explained that it had served a useful function - in the thirteenth century. It was a legal concept linked to the conquest but also to the need for repopulation. But it was, nevertheless, a legal concept that was almost 800 years old.
The law was expected to have seen the withdrawal of the alou in 2013, and there were owners who decided to scrap it. But not all. Later that year, a couple, Xus Sastre and his wife Beatrix, won a court battle after they had been pursued for the payment of 2% alou for the purchase of a house in Es Pil-lari in Palma. The demand, which amounted to 1,800 euros, came from the Marquise de Campo Franco. The couple argued that they had never heard of the tax, though when it came to formalising the purchase, a notary observed that there was a freehold but advised them that the alou would not be charged, as no one bothered demanding it.
The couple, though they won the court case, took the matter further. They raised a petition through Change.org for the eradication of this example of feudalism that had no place in a democracy. How could standards of the thirteenth century still be allowed to apply? The Romanas and the Campo Francos would doubtless argue that they could apply quite easily.
The Més party, though, asked the same question. At the end of 2013, the petition having raised 12,000 signatures, a Més parliamentary deputy said that his party would seek to have the alou abolished for good. It was a "feudal anachronism", and the 2010 law hadn't gone far enough. But if Més were to now introduce a law (and one would think that they and especially Podemos would do so), it would be too late for the airports authority Aena. A court has decided that it must pay an alou of 70,840 euros for having put to use land that was expropriated at Son Sant Joan airport in the 1960s.
Jaume I's legacy is great, and it lives on in some most peculiar ways.
Tuesday, February 24, 2015
When Canaries Sing Rebel Songs
Spain's awkward squad has just got bigger. The latest member to join the rebel souls of Catalonia and the are-they-aren't-they's in the Basque Country is the Canary Islands which, cast adrift in the Atlantic, originally Berber African rather than Spanish, were not fully brought under the control of Castile until 1495, a necessity to facilitate the use of the islands as a stopover for Columbus's voyages. The distance from Spain makes the Canaries a curiosity of colonialism contemporised within a framework of nationhood; it's as though Iceland were a part of the UK or was still a dependency of Denmark. Far away, there is none of the geographical umbilicism that hauls the Balearics towards Barcelona and Valencia while the political cord - the current one - has been twisted; accord between Santa Cruz and Las Palmas and Madrid has been ruptured, whereas the bond between Palma and Madrid remains, generally, harmonious.
One says generally, but the Balearics have their disagreements with Madrid. Financing and oil are the two most prominent, but presidential protests are ones that play to a Balearics gallery with a plot hidden behind the act; Bauzá's ambitions to tread the corridors of Madrid power may still exist, even if they have been weakened by too much hamming it up to his Balearics audience and by his being Brutus to the Madrid-admired Caesar of Mateo Isern. By contrast, the president of the Canaries, Paulino Rivero, has no such need for the duplicitousness of the staged political plot as he owes no debt to masters in Madrid. Paulino, his party - the Coalición Canaria - indeed the whole of Canaries politics at present are symbolic of the islands' remoteness; they are as though there has been a separate development.
Rivero's political interests were initially pursued within Adolfo Suarez's post-Franco democratic union coalition. He then moved on to something called the Agrupación Tinerfeña de Independientes (Tenerife independents), a party that had links to Francoism. This then became part of a Canaries-wide independence party and ultimately became what it now is - the Coalición Canaria, an unlikely conglomeration of Canaries' nationalists, ex-commies and right-wingers. Notwithstanding the former communist element, the coalition can best be described as centre-right with its unifying theme being that of Canaries' nationalism. If one were to look for a Mallorcan comparison, it would be that of the now defunct Unió Mallorquina.
Remote from the Spanish mainland, the Canaries find themselves divorced from the political mainstream in a similar fashion to Catalonia. But unlike Catalonia, there is no agitation for independence. Instead, Paulino and his nationalist coalition seek specific rebel causes. One of these had been the oil prospecting, until Repsol discovered that the oil was far from being black gold and ceased its exploration. The coalition were not left as rebels without a cause, though. They had another one. AENA.
The government in the Canaries has taken the matter of AENA's privatisation to the Supreme Court, and it has accepted the Canaries' request to look into a Canaries' demand that the privatisation is suspended. The justification for this is two-fold. One, was an acknowledgement of a lower court that a meeting of the commission overseeing affairs between the Canaries and the state had not been called to address the management of airports in the Canaries. The second was the notice that the Canaries Government had issued in July last year of a widening of powers under its statutes of autonomy in the event that the state ceases to have direct management of airports. What this all boils down to is the fact that the Canaries Government wants to have management of its eight airports, two of which - Gran Canaria and Tenerife South - are treated by AENA in the same way as Palma in that their taxes are the same.
It is difficult to see how the privatisation could be suspended given that shares are now on the market, but the court could, in principle, agree with the Canaries' argument. AENA, for its part, says that direct state management hasn't ceased because national government still holds a majority of shares. But whatever the outcome, there is a marked difference between the Canaries and the Balearics. The Bauzá government has mumbled about having management of the airports, and especially Palma, but has done absolutely nothing about it. Rivero has, and one can attribute this to the fact that, unlike Bauzá and the Balearics PP, he and his coalition are independent of Madrid. As such, one can argue that Rivero is genuinely sticking up for regional interests, whereas Bauzá merely alludes to them.
Even if the court dismisses the Canaries' claim, the point will have been made, and it is one that goes to the heart of state-regions' relationships and political associations. The Canaries can sing rebel songs, while the Balearics hum, not having the courage to sing the words.
One says generally, but the Balearics have their disagreements with Madrid. Financing and oil are the two most prominent, but presidential protests are ones that play to a Balearics gallery with a plot hidden behind the act; Bauzá's ambitions to tread the corridors of Madrid power may still exist, even if they have been weakened by too much hamming it up to his Balearics audience and by his being Brutus to the Madrid-admired Caesar of Mateo Isern. By contrast, the president of the Canaries, Paulino Rivero, has no such need for the duplicitousness of the staged political plot as he owes no debt to masters in Madrid. Paulino, his party - the Coalición Canaria - indeed the whole of Canaries politics at present are symbolic of the islands' remoteness; they are as though there has been a separate development.
Rivero's political interests were initially pursued within Adolfo Suarez's post-Franco democratic union coalition. He then moved on to something called the Agrupación Tinerfeña de Independientes (Tenerife independents), a party that had links to Francoism. This then became part of a Canaries-wide independence party and ultimately became what it now is - the Coalición Canaria, an unlikely conglomeration of Canaries' nationalists, ex-commies and right-wingers. Notwithstanding the former communist element, the coalition can best be described as centre-right with its unifying theme being that of Canaries' nationalism. If one were to look for a Mallorcan comparison, it would be that of the now defunct Unió Mallorquina.
Remote from the Spanish mainland, the Canaries find themselves divorced from the political mainstream in a similar fashion to Catalonia. But unlike Catalonia, there is no agitation for independence. Instead, Paulino and his nationalist coalition seek specific rebel causes. One of these had been the oil prospecting, until Repsol discovered that the oil was far from being black gold and ceased its exploration. The coalition were not left as rebels without a cause, though. They had another one. AENA.
The government in the Canaries has taken the matter of AENA's privatisation to the Supreme Court, and it has accepted the Canaries' request to look into a Canaries' demand that the privatisation is suspended. The justification for this is two-fold. One, was an acknowledgement of a lower court that a meeting of the commission overseeing affairs between the Canaries and the state had not been called to address the management of airports in the Canaries. The second was the notice that the Canaries Government had issued in July last year of a widening of powers under its statutes of autonomy in the event that the state ceases to have direct management of airports. What this all boils down to is the fact that the Canaries Government wants to have management of its eight airports, two of which - Gran Canaria and Tenerife South - are treated by AENA in the same way as Palma in that their taxes are the same.
It is difficult to see how the privatisation could be suspended given that shares are now on the market, but the court could, in principle, agree with the Canaries' argument. AENA, for its part, says that direct state management hasn't ceased because national government still holds a majority of shares. But whatever the outcome, there is a marked difference between the Canaries and the Balearics. The Bauzá government has mumbled about having management of the airports, and especially Palma, but has done absolutely nothing about it. Rivero has, and one can attribute this to the fact that, unlike Bauzá and the Balearics PP, he and his coalition are independent of Madrid. As such, one can argue that Rivero is genuinely sticking up for regional interests, whereas Bauzá merely alludes to them.
Even if the court dismisses the Canaries' claim, the point will have been made, and it is one that goes to the heart of state-regions' relationships and political associations. The Canaries can sing rebel songs, while the Balearics hum, not having the courage to sing the words.
Friday, February 13, 2015
AENA Privatisation: Uncertainties and unknowns
Finally, and after glitches concerning the auditor, AENA's initial public offer of shares has gone ahead. The 58 euro per share price rose on the first day of trading to over 69 euros, leaving the minister for development, Ana Pastor, a happy lady. Analysts consider it to be a strong stock, and though the price is likely to fall a little, the entry onto the Madrid stock market has been positive.
Despite the muted euphoria, there are several unknowns which cloud the AENA privatisation. One, that of union relations, has, for the time being, been placed on the back burner, the two main airport unions CCOO and USO having called off strikes that were planned from this month and through the spring and summer. Assurances have been given regarding contracts and minimum staffing levels. If the unions are now adopting a temporarily contented watching brief, not all has been rosy with the chief institutional shareholders. The belief that the privatisation might herald a phase of optimism for the Balearics has been shaken by the fact that the Banca March's investment foundation felt that the share price was too high and so has, along with Ferrovial, opted to stay out of that original core of investors and will not, therefore, be represented on the new board. Still, there has been plenty of interest from major investors such as George Soros and through sovereign funds in the Middle East, Singapore and Norway.
One of the greatest unknowns has to do with the further liberalisation of the skies and so of international airline presence at major airports, by which one means Madrid and Barcelona. Emirates, Air India, Latam Airlines are among overseas operators jostling to develop new routes and which are eyeing up Madrid in particular as a hub. There is, as a consequence, disquiet among an already emasculated Spanish airline industry that existing hub activities might be threatened; Air Europa appears especially minded to get the ear of the ministry on this matter.
And it is the relationship between the government and the 49% shareholders that provides the biggest unknown of the lot. Who ultimately will wield the power? The government may have retained a majority of shares, but how determined might it be to exercise its majority against the ambitions of others?
Coming to Mallorca and the Balearics, further development of international air routes might be thought a good thing, but only if good interconnecting schedules can be piggybacked onto routes that the likes of Emirates or Air India might desire. Otherwise, Palma looks unlikely to be a beneficiary of privatisation. This said, Ana Pastor, following the previous announcement by regional tourism minister Jaime Martínez that airport taxes will be frozen for ten years, has intimated that there may, after all, be room to manouevre in terms of lowering taxes (especially for the off-season) at Balearics airports. Airlines have naturally welcomed the suggestion, though they see in it an element of pre-election campaigning. As I have noted before, the profitability of Palma will be something that shareholders will be keen to maintain and so tax reductions would only be of interest were there a guarantee of greater profits from resultant flights.
Despite the muted euphoria, there are several unknowns which cloud the AENA privatisation. One, that of union relations, has, for the time being, been placed on the back burner, the two main airport unions CCOO and USO having called off strikes that were planned from this month and through the spring and summer. Assurances have been given regarding contracts and minimum staffing levels. If the unions are now adopting a temporarily contented watching brief, not all has been rosy with the chief institutional shareholders. The belief that the privatisation might herald a phase of optimism for the Balearics has been shaken by the fact that the Banca March's investment foundation felt that the share price was too high and so has, along with Ferrovial, opted to stay out of that original core of investors and will not, therefore, be represented on the new board. Still, there has been plenty of interest from major investors such as George Soros and through sovereign funds in the Middle East, Singapore and Norway.
One of the greatest unknowns has to do with the further liberalisation of the skies and so of international airline presence at major airports, by which one means Madrid and Barcelona. Emirates, Air India, Latam Airlines are among overseas operators jostling to develop new routes and which are eyeing up Madrid in particular as a hub. There is, as a consequence, disquiet among an already emasculated Spanish airline industry that existing hub activities might be threatened; Air Europa appears especially minded to get the ear of the ministry on this matter.
And it is the relationship between the government and the 49% shareholders that provides the biggest unknown of the lot. Who ultimately will wield the power? The government may have retained a majority of shares, but how determined might it be to exercise its majority against the ambitions of others?
Coming to Mallorca and the Balearics, further development of international air routes might be thought a good thing, but only if good interconnecting schedules can be piggybacked onto routes that the likes of Emirates or Air India might desire. Otherwise, Palma looks unlikely to be a beneficiary of privatisation. This said, Ana Pastor, following the previous announcement by regional tourism minister Jaime Martínez that airport taxes will be frozen for ten years, has intimated that there may, after all, be room to manouevre in terms of lowering taxes (especially for the off-season) at Balearics airports. Airlines have naturally welcomed the suggestion, though they see in it an element of pre-election campaigning. As I have noted before, the profitability of Palma will be something that shareholders will be keen to maintain and so tax reductions would only be of interest were there a guarantee of greater profits from resultant flights.
Friday, January 16, 2015
The Cost Of AENA Privatisation
Ryanair has been on tour in Spain this week. In Mallorca, the press was able to report the thoughts of commercial director David O'Brien. They were similar to those he had spoken in Tenerife. Ryanair, the largest airline operator in Spain in terms of passenger numbers, does things for a reason. It uses its presence to make its feelings known. In Mallorca there was all the stuff about winter flights. Yes, were landing fees and airport charges to be reduced in the off-season, then Ryanair would put on more flights from the UK and Ireland. Yes, AENA should apply differential rates for summer and winter. Yes, the Balearics should have ownership of the local airports, as decisions taken in Madrid are too distant. Ryanair said everything the local press would have wanted to hear, but Ryanair knows that none of this will happen.
In Tenerife, and so before coming to Mallorca, O'Brien had expressed his concerns about the privatisation of AENA. He said that it was likely to lead to higher airport charges, not lower. He noted that the privatisation was simply a case of swapping a publicly owned monopoly for a privately owned monopoly, which is only partly true, as the Spanish Government will keep 51%. It is true, however, as O'Brien suggested, that the privatisation process has been something of a shambles. The three key institutional shareholders, including Mallorca's Banca March, have been known for some time. They are in for 21%. The remaining 28% of shares may now finally go out for public subscription in February; there is now an auditor in place, which there hadn't been when the public sale was meant to have occurred last year.
Though the government will retain a majority of AENA shares, it will now have to take into account the requirements of its shareholders. A suggestion here that the government could simply call for a lowering of airport fees in the hope that these would bring more flights in the off-season and so more tourists, more hotels open etc. is fanciful. The development ministry, which oversees the airport infrastructure, will know that even more than before that the airports have to perform. Most of them don't. Palma airport does. Along with Barcelona, it turns in a profit way in excess of other airports in the AENA network, most of which run at a loss. The ministry is therefore interested solely in optimising airport performance and realising shareholder value; wider economic considerations are secondary.
Airport fees may indeed increase and not just because of privatisation. The Spanish airports seem likely to be operated according to the principle of the dual till in the not too distant future. This refers to the two revenue streams at an airport: those for direct airline activities and those for non-airline activities, such as car parking and retailing. Dual till would mean that the latter no longer in effect subsidise the former, and the non-airline activities are more profitable; investors are generally more interested in their value generation and not the actual airline operations.
AENA rightly point out that increasing passenger numbers (2014 has seen another record set in this regard) should offset the need for increased airport charges because of the added profit these passengers will bring, but the possibility exists that because of the shift to dual till and because of shareholder needs for a return, the charges will rise, thus dealing a blow to any potential lowering in the off-season, and especially at Palma, which is so important in the business mix of the AENA network.
What O'Brien had to say does of course make a lot of sense. The Balearics should have ownership of the airports, but this will not happen. There was a time when co-management by local government was a possibility; it surely can no longer be, thanks to privatisation. The Ryanair tour has been mainly about publicising the risk of those higher charges through a privatisation it considers to have been a mess (rightly so). It fears they will come, so as the largest operator in Spain it has been seeking to use its muscle to impress upon the government a need for restraint. As for lower charges in winter for Palma airport, they must remain highly unlikely.
In Tenerife, and so before coming to Mallorca, O'Brien had expressed his concerns about the privatisation of AENA. He said that it was likely to lead to higher airport charges, not lower. He noted that the privatisation was simply a case of swapping a publicly owned monopoly for a privately owned monopoly, which is only partly true, as the Spanish Government will keep 51%. It is true, however, as O'Brien suggested, that the privatisation process has been something of a shambles. The three key institutional shareholders, including Mallorca's Banca March, have been known for some time. They are in for 21%. The remaining 28% of shares may now finally go out for public subscription in February; there is now an auditor in place, which there hadn't been when the public sale was meant to have occurred last year.
Though the government will retain a majority of AENA shares, it will now have to take into account the requirements of its shareholders. A suggestion here that the government could simply call for a lowering of airport fees in the hope that these would bring more flights in the off-season and so more tourists, more hotels open etc. is fanciful. The development ministry, which oversees the airport infrastructure, will know that even more than before that the airports have to perform. Most of them don't. Palma airport does. Along with Barcelona, it turns in a profit way in excess of other airports in the AENA network, most of which run at a loss. The ministry is therefore interested solely in optimising airport performance and realising shareholder value; wider economic considerations are secondary.
Airport fees may indeed increase and not just because of privatisation. The Spanish airports seem likely to be operated according to the principle of the dual till in the not too distant future. This refers to the two revenue streams at an airport: those for direct airline activities and those for non-airline activities, such as car parking and retailing. Dual till would mean that the latter no longer in effect subsidise the former, and the non-airline activities are more profitable; investors are generally more interested in their value generation and not the actual airline operations.
AENA rightly point out that increasing passenger numbers (2014 has seen another record set in this regard) should offset the need for increased airport charges because of the added profit these passengers will bring, but the possibility exists that because of the shift to dual till and because of shareholder needs for a return, the charges will rise, thus dealing a blow to any potential lowering in the off-season, and especially at Palma, which is so important in the business mix of the AENA network.
What O'Brien had to say does of course make a lot of sense. The Balearics should have ownership of the airports, but this will not happen. There was a time when co-management by local government was a possibility; it surely can no longer be, thanks to privatisation. The Ryanair tour has been mainly about publicising the risk of those higher charges through a privatisation it considers to have been a mess (rightly so). It fears they will come, so as the largest operator in Spain it has been seeking to use its muscle to impress upon the government a need for restraint. As for lower charges in winter for Palma airport, they must remain highly unlikely.
Tuesday, December 16, 2014
Fifty Up: Castellón and Spain's airports
An inaugural flight was made last week. A helicopter landed at a new airport. Its occupants spent a few minutes looking around before the helicopter took off. The airport in question was that of Castellón in the Valencia region. It isn't totally accurate to say that the airport is new because it was itself inaugurated in March 2011, but forty-five months after that inauguration, the first flight - the helicopter - landed.
Of the many excesses perpetrated across Spain that only truly came to light when economic crisis engulfed the country, Castellón airport is one of the worst. It shouldn't have required public money, as the private sector was supposedly going to fund its building (a similar story to that of the disaster of Ciudad Real's airport). It has thus far cost the government in Valencia around 170 million euros, a figure that will rise to almost 200 million when a fee to be paid to the operator is factored in. This operator, the Canadian firm SNC-Lavalin, has the concession to run the airport for twenty years. It is a company which has been undergoing urgent management restructuring and establishment of corporate governance and ethics procedures. Its CEO was arrested two years ago on fraud charges.
The helicopter was able to land at the airport because the national agency for air safety, AESA, had finally granted it a licence to operate. But when the first airplanes start landing is still open to some question. Flights should start in March next year, but then flights were supposed to have started last year. They didn't, and one reason why they didn't was because the runway had to be re-built; it was too narrow. This was just one additional cost that the airport has attracted. There have been others, such as 30 million euros spent on its promotion, a sum that was revealed over two years ago. Then there is the sculpture. It cost 300,000 euros, chicken feed by comparison with some other costs, but a cost that might be added to. Will the sculpture remain? If it does, passengers, as and when they start arriving, will find a face staring out at them from the sculpture. It is the face of Carlos Fabra, ex-president of the Castellón province, who was the driving force behind the airport. Fabra started a four-year prison sentence for tax fraud on 1 December.
The airport should never have been built. A justification for it was as an alternative to Valencia's airport, which is less than an hour away to its south. But the 35,000 passengers that SNC-Lavalin believe will pass through it next year is a miniscule number when compared with over four and a half million passengers at Valencia airport in 2013. It will undoubtedly offer greater convenience for some tourists, but if, as has been said, it is expected to take fifty years to realise a return on investment, where was the wisdom? If there are indeed 35,000 passengers next year, this would place the airport in 34th place in the list of Spanish airports by passenger number (on 2013 figures). There is a vast leap in passenger numbers to the airport in 33rd position, that of El Hierro, the small island in the Canaries, which attracted almost 140,000 passengers in 2013.
Castellón would have to be added to the network of airports operated by AENA. It would bring the total to fifty. A few of these, like Son Bonet in Palma, have limited functions or are heliports rather than airports, but mostly they are airports with genuine commercial operations and Castellón would represent an additional burden for an airport network that the national minister of development, Ana Pastor, once described as "stupid and crazy". And this stupidity and craziness is something which the partially privatised AENA is going to have to get its head around. A rationalisation of the airport network has been pretty much ruled out, and Pastor admitted almost three years ago that such a rationalisation would be complicated, but what do shareholders make of an investment represented by, according to 2012 figures, an accumulated debt of over 12,600 million euros and an accumulated loss of over 70 million, a figure that would be significantly higher were it not for the profits that Palma and Barcelona turn in?
The long-term shareholders who are to acquire a 21% stake are presumably satisfied enough with their investment, but with the government retaining a 51% stake after the 28% of shares go public - delayed until at least February next year because there was no auditor in place (there now is) - room for manoeuvre in terms of network rationalisation will be limited if non-existent because the government appears not to have the political stomach for this. Small, loss-making regional airports will remain, and Castellón will be one more to add to the list.
Of the many excesses perpetrated across Spain that only truly came to light when economic crisis engulfed the country, Castellón airport is one of the worst. It shouldn't have required public money, as the private sector was supposedly going to fund its building (a similar story to that of the disaster of Ciudad Real's airport). It has thus far cost the government in Valencia around 170 million euros, a figure that will rise to almost 200 million when a fee to be paid to the operator is factored in. This operator, the Canadian firm SNC-Lavalin, has the concession to run the airport for twenty years. It is a company which has been undergoing urgent management restructuring and establishment of corporate governance and ethics procedures. Its CEO was arrested two years ago on fraud charges.
The helicopter was able to land at the airport because the national agency for air safety, AESA, had finally granted it a licence to operate. But when the first airplanes start landing is still open to some question. Flights should start in March next year, but then flights were supposed to have started last year. They didn't, and one reason why they didn't was because the runway had to be re-built; it was too narrow. This was just one additional cost that the airport has attracted. There have been others, such as 30 million euros spent on its promotion, a sum that was revealed over two years ago. Then there is the sculpture. It cost 300,000 euros, chicken feed by comparison with some other costs, but a cost that might be added to. Will the sculpture remain? If it does, passengers, as and when they start arriving, will find a face staring out at them from the sculpture. It is the face of Carlos Fabra, ex-president of the Castellón province, who was the driving force behind the airport. Fabra started a four-year prison sentence for tax fraud on 1 December.
The airport should never have been built. A justification for it was as an alternative to Valencia's airport, which is less than an hour away to its south. But the 35,000 passengers that SNC-Lavalin believe will pass through it next year is a miniscule number when compared with over four and a half million passengers at Valencia airport in 2013. It will undoubtedly offer greater convenience for some tourists, but if, as has been said, it is expected to take fifty years to realise a return on investment, where was the wisdom? If there are indeed 35,000 passengers next year, this would place the airport in 34th place in the list of Spanish airports by passenger number (on 2013 figures). There is a vast leap in passenger numbers to the airport in 33rd position, that of El Hierro, the small island in the Canaries, which attracted almost 140,000 passengers in 2013.
Castellón would have to be added to the network of airports operated by AENA. It would bring the total to fifty. A few of these, like Son Bonet in Palma, have limited functions or are heliports rather than airports, but mostly they are airports with genuine commercial operations and Castellón would represent an additional burden for an airport network that the national minister of development, Ana Pastor, once described as "stupid and crazy". And this stupidity and craziness is something which the partially privatised AENA is going to have to get its head around. A rationalisation of the airport network has been pretty much ruled out, and Pastor admitted almost three years ago that such a rationalisation would be complicated, but what do shareholders make of an investment represented by, according to 2012 figures, an accumulated debt of over 12,600 million euros and an accumulated loss of over 70 million, a figure that would be significantly higher were it not for the profits that Palma and Barcelona turn in?
The long-term shareholders who are to acquire a 21% stake are presumably satisfied enough with their investment, but with the government retaining a 51% stake after the 28% of shares go public - delayed until at least February next year because there was no auditor in place (there now is) - room for manoeuvre in terms of network rationalisation will be limited if non-existent because the government appears not to have the political stomach for this. Small, loss-making regional airports will remain, and Castellón will be one more to add to the list.
Friday, October 17, 2014
Privatising The Spanish Airports
The partial privatisation of the national airports agency, Aena, is a matter which should be of interest to us all and so not just to the millions of tourists who pass through Son Sant Joan each year. It is a privatisation which, where Palma airport is concerned, could be positive or not so positive. Son Sant Joan is the most profitable Spanish airport. Shareholders like profits and they like to see them grow and to see their dividends also grow.
It is now more accurate to talk about Enaire rather than Aena. Since July this publicly owned company has been in charge of the country's civil airports; it currently owns all the Aena shares, for which offers have been received from the private sector for an initial 21%. The remaining 28% which comprise the partial privatisation (49% of shares) are due to be offered next month. Three "core" shareholders have now been confirmed. They are Banca March, Ferrovial, which is involved with the management of several British airports, and the London-based Children's Investment Fund (TCI).
The response to the offer of this 21% shareholding was, at best, not what the government had hoped for. It would seem that the three shareholders were the only applicants. The remaining 28%, thrown open to wider public subscription, may create greater interest, but there are concerns that the lacklustre start to the privatisation process might be repeated.
A problem for Enaire/Aena is that there are so many airports which aren't profitable, and they include Madrid. There are 49 airports in all and only around a fifth of them make a profit, in addition to which there is debt which many of them have. Palma is exceptional in this regard as it carries no debt. Barcelona, on the other hand, has a similar profit level but a massive debt.
The privatisation has not been met with total approval. The CCOO union is against it, as is PSOE, which is supposedly going to attempt to paralyse the sale in Congress (quite how is not clear). The opposition is all about guarantees of jobs, but there should also be a further concern, which is what investment might be forthcoming as a consequence of privatisation. Is the sale simply a way for the government to improve its accounts? But this question aside, Palma, because of its already high performance, might benefit further. As things stand, it already in a sense gets back much of its profit through the state budget allocation. The worry might be all those airports which are a drain and which demand a diversion of investment, though this assumes that they don't get closed, and it has been argued - justifiably - that Spain has way too many airports.
One airport which is a drain is Menorca's. It runs at a substantial loss - nearly 10 million euros in 2012. It would never be closed because, unlike some airports on the mainland, it is essential both for tourists and residents. But its tourism does perhaps help to explain why it does make a loss. Menorca receives half the number of tourists that Ibiza (together with Formentera) does. Ibiza airport makes a profit, not a huge one but it is profit nonetheless and its debt is small. Menorca's isn't. Over 150 million euros in 2012. Something needs to be done about its performance, and despite crowing in the Balearics that a Mallorcan bank, March, is a shareholder and that a leading Mallorcan hotelier, Simón Barceló, is a non-executive director on the new board will mean a defence of Balearic interests, it has to be accepted that shareholders don't deal with altruism, they deal with returns on investment. Barceló's involvement is arguably the more important - as a non-exec, he would doubtless do the defending - but then both he and March are part of a much bigger business, one with all those other airports that make a loss. The Spanish Government, as majority shareholder, would find itself under fire if it were to appear that the Balearics were being favoured at the expense of smallish regional airports on the mainland. This said, the government has stated in the past that airport closure is not on the cards. Well, that remains to be seen, as indeed does the success or not of the whole share offer.
It is now more accurate to talk about Enaire rather than Aena. Since July this publicly owned company has been in charge of the country's civil airports; it currently owns all the Aena shares, for which offers have been received from the private sector for an initial 21%. The remaining 28% which comprise the partial privatisation (49% of shares) are due to be offered next month. Three "core" shareholders have now been confirmed. They are Banca March, Ferrovial, which is involved with the management of several British airports, and the London-based Children's Investment Fund (TCI).
The response to the offer of this 21% shareholding was, at best, not what the government had hoped for. It would seem that the three shareholders were the only applicants. The remaining 28%, thrown open to wider public subscription, may create greater interest, but there are concerns that the lacklustre start to the privatisation process might be repeated.
A problem for Enaire/Aena is that there are so many airports which aren't profitable, and they include Madrid. There are 49 airports in all and only around a fifth of them make a profit, in addition to which there is debt which many of them have. Palma is exceptional in this regard as it carries no debt. Barcelona, on the other hand, has a similar profit level but a massive debt.
The privatisation has not been met with total approval. The CCOO union is against it, as is PSOE, which is supposedly going to attempt to paralyse the sale in Congress (quite how is not clear). The opposition is all about guarantees of jobs, but there should also be a further concern, which is what investment might be forthcoming as a consequence of privatisation. Is the sale simply a way for the government to improve its accounts? But this question aside, Palma, because of its already high performance, might benefit further. As things stand, it already in a sense gets back much of its profit through the state budget allocation. The worry might be all those airports which are a drain and which demand a diversion of investment, though this assumes that they don't get closed, and it has been argued - justifiably - that Spain has way too many airports.
One airport which is a drain is Menorca's. It runs at a substantial loss - nearly 10 million euros in 2012. It would never be closed because, unlike some airports on the mainland, it is essential both for tourists and residents. But its tourism does perhaps help to explain why it does make a loss. Menorca receives half the number of tourists that Ibiza (together with Formentera) does. Ibiza airport makes a profit, not a huge one but it is profit nonetheless and its debt is small. Menorca's isn't. Over 150 million euros in 2012. Something needs to be done about its performance, and despite crowing in the Balearics that a Mallorcan bank, March, is a shareholder and that a leading Mallorcan hotelier, Simón Barceló, is a non-executive director on the new board will mean a defence of Balearic interests, it has to be accepted that shareholders don't deal with altruism, they deal with returns on investment. Barceló's involvement is arguably the more important - as a non-exec, he would doubtless do the defending - but then both he and March are part of a much bigger business, one with all those other airports that make a loss. The Spanish Government, as majority shareholder, would find itself under fire if it were to appear that the Balearics were being favoured at the expense of smallish regional airports on the mainland. This said, the government has stated in the past that airport closure is not on the cards. Well, that remains to be seen, as indeed does the success or not of the whole share offer.
Saturday, September 01, 2012
MALLORCA TODAY - Airport luggage trolleys to cost a euro from next year
Described by the USO union as a form of tax collection, the airports authority AENA is to introduce the payment of a euro for the use of luggage trolleys at Palma's Son Sant Joan airport from January 2013. The measure is not confined to Palma; at four others, all significant tourism airports, the charge will also apply.
See more: Ultima Hora
See more: Ultima Hora
Sunday, August 26, 2012
MALLORCA TODAY - More abuses by AENA claimed by Palma air-traffic controllers
The air-traffic controllers are really cranking up the propaganda war, alleging that AENA, the airports authority, has been using an agreement whereby controllers can be called in to cover emergencies to the extent that it has become almost standard practice caused, not by excessive staff absence but by a lack of staff. In addition, it is said that AENA changed shifts of two controllers without giving the necessary month's notice that was agreed when the two sides went to arbitration last year.
It might be remembered that the arbitration resulted from the strike by controllers in Spain in December 2010, a dispute which has not been fully resolved by the legal system as there are outstanding cases against named controllers to be finally judged and which carry the possibility of lengthy prison sentences.
See more: El Mundo
It might be remembered that the arbitration resulted from the strike by controllers in Spain in December 2010, a dispute which has not been fully resolved by the legal system as there are outstanding cases against named controllers to be finally judged and which carry the possibility of lengthy prison sentences.
See more: El Mundo
Wednesday, June 06, 2012
MALLORCA TODAY - Airport taxes to be reduced in winter
AENA, the national airports authority, has agreed to reduce taxes for the use of Balearic airports, including therefore Palma's Son Sant Joan, during the winter months from November to March. This is a move which is hoped might result in more winter flights.
See more: Ultima Hora
See more: Ultima Hora
Friday, March 25, 2011
MALLORCA TODAY - A great year now that the airport strikes are off
José Blanco, the Spanish minister of development (whose job includes transport), says that the country can look forward to a great year for tourism now that the threat of strikes at Spanish airports this Easter and summer has been lifted. Airport workers yesterday ratified the agreement that the unions and the airports authority, AENA, had come to last week.
Thursday, March 24, 2011
MALLORCA TODAY - AENA employees in Balearics vote against strike
594 for and 134 against. The result of the vote of AENA employees at airports in the Balearics to accept the pre-agreement struck last week by the unions and the airports authority. The threat of strike action at Easter and at other times of the summer has now been lifted.
Friday, March 18, 2011
MALLORCA TODAY - AENA employees to vote on 24 March
Employees of the AENA airports authority will vote on the pre-agreement arrived at between the unions and AENA on Tuesday. The vote, it is hoped, will go in favour of the agreement brokered by the unions and so definitively mean that strikes that had been called for Easter and during the summer will not go ahead.
MALLORCA TODAY - Mesquida confident about airports' agreement
The Spanish secretary-general for tourism, the Mallorcan Joan Mesquida, has said that he is confident that union members will ratify the agreements arrived at by union leaders and the airports authority AENA which will remove the threat of strike action this summer.
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