Ryanair to close its base at Reus airport next October

The Irish company has accused the local administration of not honouring current agreements, in place until 2013. The Catalan President has assured that the Government has absolutely “fulfilled” the current agreements and that the “problems started when these agreements wanted to be modified”. The low-cost airline is in a dispute with the Catalan Government over its continuity in Girona-Costa Brava; Ryanair is asking for an extra 7.5 million euros. The Catalan Minister for Transportation considered Ryanair’s attitude as “blackmail”. The Government announced this evening that it will freeze current negotiations with Ryanair until it has the “assurance” that the Irish company “fulfils what it signed”.

CNA / Gaspar Pericay Coll

June 30, 2011 12:27 AM

Barcelona (ACN).- Ryanair has gone one step further in its particular discussion with the Catalan Government over current and future agreements to operate from Girona and Reus airport. The Vice President of Ryanair Michael Cawley announced this Wednesday morning that the Irish company will shut down its operating base at Reus next October 30th. Three planes are based in Reus, from where the airline runs 28 routes. Cawley accused the Catalan Government and local administrations of not honouring the agreements currently in place. Ryanair has agreements in place until the end of 2011 at Girona and until 2013 for Reus. However, the Irish low-cost airline is asking local administrations for more money to stay in those secondary airports, a year after it started to operate from Barcelona Airport, which is much more profitable and where it wants to increase its presence. The President of the Catalan Government, Artur Mas stressed that the Executive “has fulfilled” all its contractual obligations and judged Ryanair’s way of acting as “strange”. In addition, Tarragona’s Mayor considers the airline’s accusations to be “humiliating”. He stressed that his administration has “rigorously” honoured the agreements and he asked the Catalan Government to stand firm and not fall for Ryanair’s “blackmailing” techniques. In response, the Catalan Government reacted by freezing the current negotiations with Ryanair over Girona, where the low-cost airline is now asking for an extra 7.5 million euros.

All these discussions started when the new Catalan Government, which took office just after Christmas, announced in early 2011 it would temporarily freeze the pre-agreement reached by the previous Catalan Executive and Ryanair to study it calmly because of the imperious need to reduce the public deficit. The pre-agreement foresaw paying the airline 7.5 million euros if it transported a minimum of 4 million passengers per year through Girona-Costa Brava Airport, plus a bonus if the number was higher. The current agreement is smaller and the new one, if it would have been signed, would have entered into force in early 2012. However, Ryanair decided to partially quit Girona, despite the current agreement being in place until the end of 2011, the new agreement had not been yet been signed, a new Catalan Government took office, and the public deficit’s reduction conditioned all the Government’s decisions. The Irish company is said to have taken this decision after the Catalan Government gave a 20 million euro loan to Spanair, an airline partially owned by the Catalan executive since 2009 to promote Barcelona-El Prat Airport as an intercontinental hub.

In February, Ryanair announced it would reduce 28% of its routes through Girona from May onwards, a threat it kept. The Catalan Government was surprised by the Irish low-cost carrier's reaction. Opposition parties criticised the Government for not having been sufficiently diplomatic with Ryanair, although they also criticised the airline’s way of acting. Negotiations restarted, but Ryanair was asking for even more money than the pre-agreement it negotiated at the end of 2010.

The Catalan Government made a new offer to Ryanair

The Catalan Government sent a new offer to Ryanair early last week to maintain its presence at Girona Airport. Catalonia would pay the Irish low-cost airline 7.5 million euros if the company brought 4 million passengers each year, until this point, the offer was the same as the earlier agreement. In exchange for the money bonus, the Government offered Ryanair some land for free next to Girona-Costa Brava Airport with the condition to build a hangar, a hotel or a pilot school. Ryanair did not officially answer the offer but said it wanted double the amount: 15 million euros.

Ryanair leaked it would leave Reus, the day after the Catalan Government made a new offer regarding Girona

To put greater pressure on the administration, a day after the Catalan Government made its new offer, Ryanair leaked that the air company was considering abandoning Reus, another airport in Southern Catalonia that has an ongoing agreement with Ryanair until the end of 2013. The Catalan Minister for Transportation, Lluís Recoder stated that the Government would not surrender to the airline’s “blackmail”. He also asked the Spanish Government to reduce airport taxes in Girona and Reus, to make them more attractive for airlines. In fact, the Catalan Government cannot decide on airport taxes, neither on air slots. In this case, it can only act as an economic agent promoting the local economy and tourism.

Ryanair announced it would shut its Reus base

This Wednesday, Ryanair confirmed the leak. It will shut down its base at Reus, which will drastically reduce its activity in the airport.  From the 30th October,all the 28 current routes (24 international and 4 within Spain) will end, and the three planes based on the airport will be assigned to another destination. However, some of its flights may still go through Reus in the summer 2012, although they will not have it as a base.

The current agreement, for which Ryanair is paid, is in place until the end of 2013. According to Ryanair, the decision would mean the loss of 150 direct jobs and some 1,300 indirect jobs. In addition, according to the company, since it began operating from Reus, it has transported through this airport around 5million passengers, which means 500 million euros in spending in the Tarragona area.

Both parts accuse each other of not honouring the agreements

Ryanair’s Vice President, Michael Cawley complained that the agreement to operate from Reus foresaw an effort from local administrations to advertise its coastline to attract tourism. According to Cawley, Ryanair has found itself alone promoting this destination. An accusation both the Catalan Government and Tarragona’s Town Hall deny. For instance, Tarragona presented its candidature to host the next Mediterranean games and Costa Daurada is broadly advertised. The Catalan Government and Tarragona’s Town Hall emphasised they have “rigorously” fulfilled the agreements in place, “something that not everybody can say” said the Catalan President referring to Ryanair. As a response, the Catalan Government has frozen negotiations with Ryanair to stay in Girona, waiting to be sure that the Irish company can stick to what it has been signed up for and not constantly ask for more money.