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
Showing posts with label Airports. Show all posts
Showing posts with label Airports. Show all posts
Tuesday, May 31, 2016
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.
Friday, August 21, 2015
The Boneheadedness Of The Eco-Tax
I know I shouldn't but I can't help myself. Anglicising or finding close similarities to English words from names from other cultures is not very fair. But I fear I have to indulge in this somewhat puerile exercise in the case of the regional minister for transport. I wasn't going to, I really had no desire to, but when I started scratching my own head, I was left with no option. The minister's name is Boned. Not too far removed from the nickname of Oasis's rhythm guitarist or from the American slang which gave the English language an insult and the subsequent noun.
The head scratching had to do with the eco-tax. Not the fact of it, but the preference for its collection. At airports and ports. How the hell's that going to work? It is this preference which leads one to conclude that the regional government and its unfortunately named transport minister are engaging in boneheadedness. Stubbornness, obstinacy, foolishness. They're bringing an eco-tax on themselves, pressing ahead with it, getting themselves deeper into a hole from which they won't be able to escape by burying themselves in the impracticalities of the collection preference.
Sr. Boned would like to have a meeting with the minister for development, Ana Pastor, she the ultimate shepherd(ess) of all who are packed into the pens of arrivals, having obediently followed in their flocks the stark instruction of baggage reclaim. As development minister, she has the final say on all things airports. Boned wants to have a word, to ask her to let the Balearics collect the eco-tax at airports (and ports).
The chances of her agreeing to this are probably slightly less than zero. She is, as the regional government is only too aware, a member of the Partido Popular, with whom the parties of the regional government have their disagreements and differences in ideology. An area of disagreement is the eco-tax. The PP's secretary-of-state for tourism, Mallorca's very own Isabel Borrego, has declared her opposition to such a tax: it is unlikely to curry much favour elsewhere in the PP national government.
Ideology, however, has typically played little part in tourist-tax introduction elsewhere. Catalonia is not a left-wing administration, but it has a tax. If leftism were a pre-requisite, then Andalusia, continuously socialist-led since democracy, would have had one years ago. They don't even really talk about it down there. Ideology shouldn't, therefore, be a factor, but when Pastor is presented with the Boned request, one would trust that one of her questions would be, assuming she is even vaguely minded to agree in principle to the request - how will you do it?
I'm assuming, hoping that the government has actually given this some thought. For example, how does it intend processing eco-tax payment from the some 80,000 arrivals on a busy day in summer? Think about if for a moment, because there are times of days when there are significant peaks in the volume of passengers. What will they do? Have a tax check-in? The mind boggles.
There are other practicalities. How is a tourist distinguished from a non-tourist? It might be easy to identify many a tourist - lads on tour t-shirts, pasty faces and what have you - but there would still have to be some way of filtering. How do they do that? Coming in on a charter plane would make the task easier, but not everyone does. Has the government not noticed the increase in the volume of direct-booked, low-cost air travellers? And not everyone travelling Ryanair is a tourist by any means.
Then there would be the charge. If it is to be, as hinted, one or two euros per night, how do they check the length of stay? Is there to be some sort of stamp to check a tourist in, to be presented on departure in order to verify that the right amount has been paid? Are tourists to be tagged and geo-located in order to check the time they are in Mallorca?
But while these logistical issues - pretty important ones at that - raise all sorts of questions, is there not something altogether more fundamental? Image. Perception. If, as a government, you are introducing a tax system, which will not be universally popular, and you do so by presenting the need for a visitor to hand over money the moment he or she steps on dry Mallorcan land, do you not create a negative perception? If this is then compounded by queuing to make the payment, by some system of verification, then you face almost certain PR disaster.
This is why I'm scratching my head, perplexed by the apparent boneheadedness. But then, they must have thought about all this and will already be hard at work designing a flawless system. If only.
The head scratching had to do with the eco-tax. Not the fact of it, but the preference for its collection. At airports and ports. How the hell's that going to work? It is this preference which leads one to conclude that the regional government and its unfortunately named transport minister are engaging in boneheadedness. Stubbornness, obstinacy, foolishness. They're bringing an eco-tax on themselves, pressing ahead with it, getting themselves deeper into a hole from which they won't be able to escape by burying themselves in the impracticalities of the collection preference.
Sr. Boned would like to have a meeting with the minister for development, Ana Pastor, she the ultimate shepherd(ess) of all who are packed into the pens of arrivals, having obediently followed in their flocks the stark instruction of baggage reclaim. As development minister, she has the final say on all things airports. Boned wants to have a word, to ask her to let the Balearics collect the eco-tax at airports (and ports).
The chances of her agreeing to this are probably slightly less than zero. She is, as the regional government is only too aware, a member of the Partido Popular, with whom the parties of the regional government have their disagreements and differences in ideology. An area of disagreement is the eco-tax. The PP's secretary-of-state for tourism, Mallorca's very own Isabel Borrego, has declared her opposition to such a tax: it is unlikely to curry much favour elsewhere in the PP national government.
Ideology, however, has typically played little part in tourist-tax introduction elsewhere. Catalonia is not a left-wing administration, but it has a tax. If leftism were a pre-requisite, then Andalusia, continuously socialist-led since democracy, would have had one years ago. They don't even really talk about it down there. Ideology shouldn't, therefore, be a factor, but when Pastor is presented with the Boned request, one would trust that one of her questions would be, assuming she is even vaguely minded to agree in principle to the request - how will you do it?
I'm assuming, hoping that the government has actually given this some thought. For example, how does it intend processing eco-tax payment from the some 80,000 arrivals on a busy day in summer? Think about if for a moment, because there are times of days when there are significant peaks in the volume of passengers. What will they do? Have a tax check-in? The mind boggles.
There are other practicalities. How is a tourist distinguished from a non-tourist? It might be easy to identify many a tourist - lads on tour t-shirts, pasty faces and what have you - but there would still have to be some way of filtering. How do they do that? Coming in on a charter plane would make the task easier, but not everyone does. Has the government not noticed the increase in the volume of direct-booked, low-cost air travellers? And not everyone travelling Ryanair is a tourist by any means.
Then there would be the charge. If it is to be, as hinted, one or two euros per night, how do they check the length of stay? Is there to be some sort of stamp to check a tourist in, to be presented on departure in order to verify that the right amount has been paid? Are tourists to be tagged and geo-located in order to check the time they are in Mallorca?
But while these logistical issues - pretty important ones at that - raise all sorts of questions, is there not something altogether more fundamental? Image. Perception. If, as a government, you are introducing a tax system, which will not be universally popular, and you do so by presenting the need for a visitor to hand over money the moment he or she steps on dry Mallorcan land, do you not create a negative perception? If this is then compounded by queuing to make the payment, by some system of verification, then you face almost certain PR disaster.
This is why I'm scratching my head, perplexed by the apparent boneheadedness. But then, they must have thought about all this and will already be hard at work designing a flawless system. If only.
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.
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.
Wednesday, May 09, 2012
Stupid And Crazy: Spain's airports
Following the previous feature about the profitability of Palma's Son Sant Joan, more on airports and this time their lack of profitability.
The national government's minister for development (which covers transport) has announced that there is to be a study of the viability and profitability of the whole of Spain's network of airports. The number of airports that this network comprises varies depending on which report you come across. It fluctuates between 46 and 49. Whatever the actual figure (and let's get round the confusion by saying that there are nearly 50), the fact is that there are way more airports in Spain than in, just as an example, Germany. Way more to the tune of there being twice as many for a population almost half the size.
At the end of the previous article, I concluded by sounding a warning for Menorca. Its airport is heavily in debt and its losses last year were among the highest of any airport in the Spanish network. It would, however, be most unlikely that Menorca would lose its airport, given that it is essential and that it would qualify for being maintained under a criterion of "public benefit", but there are plenty of airports within the network that could well face the axe.
The minister, Ana Pastor, has admitted that any adjustment to or rationalisation of the airport network would be "complicated". The complication is created by an infrastructure of airports which is, in her words, "stupid and crazy". There are far too many airports and far too many that came into being for no particularly good reason.
The growth in the airport network was symptomatic of the construction-led infrastructure boom in Spain which has been partly responsible for the mess the country is now in. While the continuance of older airports, such as Menorca's, despite its loss-making, is fully justifiable, the continuance of some newer ones is much harder to justify. Only ten of the airports in the network make a positive return, and of those which don't there are examples of airports having been built which were as a result of sheer folly. Which brings us to the case of Castellón airport.
This airport, less than an hour away from Valencia's main airport, was built at a cost of 150 million euros. It was opened in March last year. To date, there has not been a single flight. The reasons why not are many, one of them having been the absence of the necessary licence. It is said that Castellón now has an agreement with Jet2 to start flights next year and that negotiations are ongoing with other airlines, but in the meantime, and in addition to the cost of its construction, the runway will have to be re-built as it is too narrow, 30 million euros have apparently been eaten up on advertising the airport and 300,000 euros have been spent on a truly hideous sculpture.
The sculpture tells its own tale. Featured within it is the face of Carlos Fabra, a leading Partido Popular politician and a prime mover behind the airport's construction. Fabra has been implicated, on more than one occasion, in corruption cases.
Castellón is perhaps an extreme example of the profligacy of the development of Spain's airport network. It is an example also, however, of how regional administrations have contributed to Spain's economic plight by embarking on wholly unnecessary projects.
Flavour of the month it is to give the regional governments a good kicking, but a recent and insightful article by a Spanish journalist writing in English for the "El Pais" newspaper's English website argued that the problem lies not with the system of regional government but with the politicians it gives rise to. It is a fair point, but the trouble is that if you give someone a toy then they will play with it, which is precisely what has happened. Hence the pointless, expensive and sometimes unused infrastructure projects that proliferate across Spain, of which regional airports are a case in point.
When the development minister speaks of "stupid and crazy" infrastructure, she could as easily be referring to projects other than just airports. Mallorca has its own examples, the current building of the Palacio de Congresos in Palma being one. The impression has been given that the only reason for it coming into existence is because other Spanish cities have got similar convention centres; an exercise in me-too in other words.
Me-too has been the real impulse behind all the airports, and of the new ones, none are profitable. Stupid and crazy? Discuss.
Any comments to andrew@thealcudiaguide.com please.
The national government's minister for development (which covers transport) has announced that there is to be a study of the viability and profitability of the whole of Spain's network of airports. The number of airports that this network comprises varies depending on which report you come across. It fluctuates between 46 and 49. Whatever the actual figure (and let's get round the confusion by saying that there are nearly 50), the fact is that there are way more airports in Spain than in, just as an example, Germany. Way more to the tune of there being twice as many for a population almost half the size.
At the end of the previous article, I concluded by sounding a warning for Menorca. Its airport is heavily in debt and its losses last year were among the highest of any airport in the Spanish network. It would, however, be most unlikely that Menorca would lose its airport, given that it is essential and that it would qualify for being maintained under a criterion of "public benefit", but there are plenty of airports within the network that could well face the axe.
The minister, Ana Pastor, has admitted that any adjustment to or rationalisation of the airport network would be "complicated". The complication is created by an infrastructure of airports which is, in her words, "stupid and crazy". There are far too many airports and far too many that came into being for no particularly good reason.
The growth in the airport network was symptomatic of the construction-led infrastructure boom in Spain which has been partly responsible for the mess the country is now in. While the continuance of older airports, such as Menorca's, despite its loss-making, is fully justifiable, the continuance of some newer ones is much harder to justify. Only ten of the airports in the network make a positive return, and of those which don't there are examples of airports having been built which were as a result of sheer folly. Which brings us to the case of Castellón airport.
This airport, less than an hour away from Valencia's main airport, was built at a cost of 150 million euros. It was opened in March last year. To date, there has not been a single flight. The reasons why not are many, one of them having been the absence of the necessary licence. It is said that Castellón now has an agreement with Jet2 to start flights next year and that negotiations are ongoing with other airlines, but in the meantime, and in addition to the cost of its construction, the runway will have to be re-built as it is too narrow, 30 million euros have apparently been eaten up on advertising the airport and 300,000 euros have been spent on a truly hideous sculpture.
The sculpture tells its own tale. Featured within it is the face of Carlos Fabra, a leading Partido Popular politician and a prime mover behind the airport's construction. Fabra has been implicated, on more than one occasion, in corruption cases.
Castellón is perhaps an extreme example of the profligacy of the development of Spain's airport network. It is an example also, however, of how regional administrations have contributed to Spain's economic plight by embarking on wholly unnecessary projects.
Flavour of the month it is to give the regional governments a good kicking, but a recent and insightful article by a Spanish journalist writing in English for the "El Pais" newspaper's English website argued that the problem lies not with the system of regional government but with the politicians it gives rise to. It is a fair point, but the trouble is that if you give someone a toy then they will play with it, which is precisely what has happened. Hence the pointless, expensive and sometimes unused infrastructure projects that proliferate across Spain, of which regional airports are a case in point.
When the development minister speaks of "stupid and crazy" infrastructure, she could as easily be referring to projects other than just airports. Mallorca has its own examples, the current building of the Palacio de Congresos in Palma being one. The impression has been given that the only reason for it coming into existence is because other Spanish cities have got similar convention centres; an exercise in me-too in other words.
Me-too has been the real impulse behind all the airports, and of the new ones, none are profitable. Stupid and crazy? Discuss.
Any comments to andrew@thealcudiaguide.com please.
Tuesday, August 09, 2011
MALLORCA TODAY - Spanish baggage handlers strikes called off
The unions which had called for strikes of ground staff at Spanish airports on 18 and 26 August have now called them off. Panic over.
Monday, August 08, 2011
MALLORCA TODAY - Spanish baggage handlers and German air-traffic control strikes
German air-traffic controllers will strike from 04.00 to 10.00 tomorrow (9 August) and Spanish baggage handlers are also set to strike on two days later this month, 18 and 26 August. These strikes would be for 24 hours from midnight to midnight.
Thursday, March 10, 2011
MALLORCA TODAY - Airport strikes' negotiations break down
Negotiations between the Spanish national airports authority AENA and the unions representing workers who might face job losses as a consequence of the planned partial privatisation of Spain's airports have broken down this evening without agreement. As things stand, therefore, the threat of strikes, starting on 20 April and lasting during the summer, remains. AENA has given the unions a proposal to study further. One of the main issues for the unions would appear to be the future management of Madrid and Barcelona airports.
MALLORCA TODAY - Unions meet with AENA
Representatives of three unions - the CCOO, UGT and USO - are now meeting with AENA officials at the airport authority's headquarters. This is the first meeting between the two sides since the unions announced their intention to strike on 22 days through the tourism season. The minister for development (which includes transport), José Blanco, appears confident that the strikes will not go ahead.
The morning's meeting broke up without agreement, the unions expressing displeasure with the fact that there was no representative from the development ministry and that the president of AENA was present for only a quarter of an hour.
The parties are due to sit down again at 17.00 this afternoon.
The morning's meeting broke up without agreement, the unions expressing displeasure with the fact that there was no representative from the development ministry and that the president of AENA was present for only a quarter of an hour.
The parties are due to sit down again at 17.00 this afternoon.
Saturday, February 26, 2011
MALLORCA TODAY - Easter airports' strike threat
The privatisation of AENA, the national airports agency, is getting under way, the Spanish Government having created a new company (Aena Aeropuertos) into which will pass control of airports. The process of privatisation will start with control towers at 13 airports this April. The rest of the process, which covers 47 airports, will be effected in 2012.
The unions are planning demonstrations today against privatisation and are also threatening a strike over Easter, negotiations seemingly having broken down with the transport ministry.
The unions are planning demonstrations today against privatisation and are also threatening a strike over Easter, negotiations seemingly having broken down with the transport ministry.
Monday, September 20, 2010
Mister White: Residents' travel discounts
"Fomento". Its literal translation is "promotion", to mean development. English suggests the verb foment, to stir up, as in to stir up trouble or dissent. There is a minister for "fomento", a minister for stirring up brown stuff. It's not totally inaccurate; the Spanish verb "fomentar" can mean the same as the English.
The central government's fomento minister, José Blanco, knows a thing or two about promotion, promoting dissent. Who's behind the possible removal of Balearic residents' travel discounts? Mr. White. The one who, some on the extreme dissent spectrum might hope, is with Mr. Orange as the police arrive. You don't go around implying that Mallorcans are like thieves for taking advantage of discounted flights that you claim are not necessary without expecting some negative response.
Blanco has the misfortune in heralding from about as far as you can get in mainland Spain from Mallorca - Galicia. Cue an outburst of peculiarly Mallorcan xenophobia: Blanco's a Galician, hence he's got it in for Mallorca. It's rubbish, but Blanco's insinuations hardly win him friends.
Just one of the beefs with the proposed elimination of the travel discount is that air travel from Mallorca to other parts of Spain is expensive as it is. Sr. Blanco might reflect on the fact that were he to fancy an overnight break in Barcelona this coming weekend, the cost of a far longer flight by Vueling from A Coruña in his native Galicia would be, proportionally, far cheaper than one to Barcelona from Palma with the same airline: 14 kilometres for every euro from Galicia, as opposed to six per euro from Palma.
On the face of it, the higher prices of air travel don't make much sense when one considers the fact that the Son Sant Joan airport in Palma is the third busiest in Spain. But there's a take on these prices. It comes from Pepa Mari, the tourism councillor at the Council of Ibiza. In an interview with Ibiza-Blog.com last November she said: "It looks as if the 50 per cent residents' discount is preventing the airlines and ferry services from introducing more attractive prices for non-residents. So the system of subsidies needs to be revised."
The interview was in the context of an appraisal of Ibiza's tourism situation at the end of the last summer season, but an implication of what she was saying is that prices are inflated in the knowledge that many travellers, if by no means all, can enjoy a discount. In other words, it is the airlines cashing in on central government's subsidies, not Mallorcans taking unnecessary flights to the mainland.
Another beef with Sr. Blanco and Madrid goes deeper than just the discounts. It has to do with the management of the airport. In January it was being said that "all conditions" had been met which would allow local management of Son Sant Joan. But no time frame has been decided upon to tip the pot of gold the airport generates into local hands and not those, via the airports agency AENA, of central government in the form of the department which effectively acts as the airport's holding company - Sr. Blanco's. Local management has long been an ambition of Mallorca's politicians, and the income it would create might offset a further beef - the apparent under-investment in the islands by Madrid. And which department is responsible for overseeing infrastructure developments?
President Antich is opposed to the removal of the discounts, just as he is in favour of management of the airport and greater funding. He also has an election looming. The discounts row has come at a good time for the president, his local PSOE socialist party having indicated that it is distancing itself from the Zapatero PSOE administration in Madrid. Blanco and his subsidies are a convenient peg on which to hang a manifesto.
Despite his being demonised, Blanco may have a point; it's just that the point he is making is the wrong one. Rather than styling the removal of subsidies as cost-cutting, it should be seen as potentially market-driven and as the abandonment of something of an anachronism. The discounts date back to a law of 1962. Mallorca was very different then, and so was the airline industry.
QUIZ -
Yesterday: A burgling Peter Cook.
Any comments to andrew@thealcudiaguide.com please.
The central government's fomento minister, José Blanco, knows a thing or two about promotion, promoting dissent. Who's behind the possible removal of Balearic residents' travel discounts? Mr. White. The one who, some on the extreme dissent spectrum might hope, is with Mr. Orange as the police arrive. You don't go around implying that Mallorcans are like thieves for taking advantage of discounted flights that you claim are not necessary without expecting some negative response.
Blanco has the misfortune in heralding from about as far as you can get in mainland Spain from Mallorca - Galicia. Cue an outburst of peculiarly Mallorcan xenophobia: Blanco's a Galician, hence he's got it in for Mallorca. It's rubbish, but Blanco's insinuations hardly win him friends.
Just one of the beefs with the proposed elimination of the travel discount is that air travel from Mallorca to other parts of Spain is expensive as it is. Sr. Blanco might reflect on the fact that were he to fancy an overnight break in Barcelona this coming weekend, the cost of a far longer flight by Vueling from A Coruña in his native Galicia would be, proportionally, far cheaper than one to Barcelona from Palma with the same airline: 14 kilometres for every euro from Galicia, as opposed to six per euro from Palma.
On the face of it, the higher prices of air travel don't make much sense when one considers the fact that the Son Sant Joan airport in Palma is the third busiest in Spain. But there's a take on these prices. It comes from Pepa Mari, the tourism councillor at the Council of Ibiza. In an interview with Ibiza-Blog.com last November she said: "It looks as if the 50 per cent residents' discount is preventing the airlines and ferry services from introducing more attractive prices for non-residents. So the system of subsidies needs to be revised."
The interview was in the context of an appraisal of Ibiza's tourism situation at the end of the last summer season, but an implication of what she was saying is that prices are inflated in the knowledge that many travellers, if by no means all, can enjoy a discount. In other words, it is the airlines cashing in on central government's subsidies, not Mallorcans taking unnecessary flights to the mainland.
Another beef with Sr. Blanco and Madrid goes deeper than just the discounts. It has to do with the management of the airport. In January it was being said that "all conditions" had been met which would allow local management of Son Sant Joan. But no time frame has been decided upon to tip the pot of gold the airport generates into local hands and not those, via the airports agency AENA, of central government in the form of the department which effectively acts as the airport's holding company - Sr. Blanco's. Local management has long been an ambition of Mallorca's politicians, and the income it would create might offset a further beef - the apparent under-investment in the islands by Madrid. And which department is responsible for overseeing infrastructure developments?
President Antich is opposed to the removal of the discounts, just as he is in favour of management of the airport and greater funding. He also has an election looming. The discounts row has come at a good time for the president, his local PSOE socialist party having indicated that it is distancing itself from the Zapatero PSOE administration in Madrid. Blanco and his subsidies are a convenient peg on which to hang a manifesto.
Despite his being demonised, Blanco may have a point; it's just that the point he is making is the wrong one. Rather than styling the removal of subsidies as cost-cutting, it should be seen as potentially market-driven and as the abandonment of something of an anachronism. The discounts date back to a law of 1962. Mallorca was very different then, and so was the airline industry.
QUIZ -
Yesterday: A burgling Peter Cook.
Any comments to andrew@thealcudiaguide.com please.
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