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The privatisation of Barcelona El Prat and Madrid Barajas airports halted by the new Spanish Government

The participation of the Catalan business community and local governments in the management of Barcelona’s Airport has been halted. This has been a long-term claim by many in Catalonia, as they believe that the centralised management of the airports has clearly benefited Madrid over Barcelona. The new Spanish Minister for Public Works and Transport announced the decision to cancel the tender process to privatise the management of Spain’s two main airports, Madrid Barajas and Barcelona El Prat. The reasons for the decision have been put down to a negative time for the markets and a desire for the value of the assets to increase in the future.

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23 January 2012 11:10 PM

by

ACN / Gaspar Pericay Coll

Madrid (ACN).- The new Spanish Government, run by the conservative People\u2019s Party (PP), has halted the privatisation of Spain\u2019s two main airports. At a press conference held in Madrid on Monday the Spanish Minister for Public Works and Transport, Ana Pastor, announced that Madrid Barajas and Barcelona El Prat will not be managed separately to the rest of the Spanish airports by private companies, as the previous Government had planned. \u201CThe entrance of private capital would come at a later stage\u201D, once \u201Cthe assets have increased in value\u201D, explained Pastor. The ongoing tender process for private companies to manage these two airports separately has come to a halt, despite its deadline expiring on January 31st. Seven offers had been received, five of which have been to operate both airports, one to only manage Madrid Barajas and another only for Barcelona El Prat. Furthermore, the previous plan also included the participation of the local business community, the Catalan Government and local governments in the management, which is a similar model than that of Paris\u2019 airports. This has been a very vocal claim by Catalan politicians and business people.

Pastor explained that the new Spanish Government has begun to develop its own airport model, however it has not yet been made public. Furthermore, according to Pastor, the current market instability has made the operation less attractive than expected, as the assets were \u201Cundervalued\u201D. The plan has been postponed in order to allow \u201Cthe assets increase in value\u201D. In addition, Pastor said that the new Government wants to maintain Spain\u2019s airport network as one, as a \u201Chomogeneous model\u201D. The Catalan Government stressed that they do not oppose postponing the entrance of private capital, but they want to continue being included in the airport\u2019s future management along with local business people and town halls. Some political parties in Catalonia expressed their fears of stopping the planned partial decentralisation and the return to a centralised model that has clearly been benefiting Madrid Barajas Airport over Barcelona El Prat.


A centralised network

Currently, the Spanish Airport Authority (AENA) owns and manages all Spanish airports. The model has clearly benefited Madrid Barajas Airport, which has received three times more money than Barcelona Airport in investments over the last 15 years. In addition, partially state-owned airline Iberia took the decision to concentrate all its intercontinental flights in Madrid and to stop most of its international routes from Barcelona, where it then based its new low-cost company Clickair \u2013which later merged with Vueling\u2013. Therefore, Madrid has become Spain\u2019s main hub, and almost the only one at an intercontinental level (particularly with South-America), and Barcelona was relegated to a secondary position. In the last years, the trend has started being corrected and Barcelona started to become an intercontinental hub. However, the fear in Catalonia is now that with Pastor\u2019s \u201Chomogeneous model\u201D, Barcelona will be again relegated to a secondary position.

A claim from Catalonia for an intercontinental hub in Barcelona

In the last number of years, there have been great efforts made from Catalonia to change this situation and consolidate Barcelona El Prat Airport into an intercontinental hub.  This was a claim long maintained by the Catalan business community and by Catalan political powers, lead by the Catalan Government and Barcelona\u2019s City Council. And positive results are beginning to show. Barcelona El Prat has seen the number of intercontinental and international flights dramatically increase over the last number of years. However, there has been a feeling that an institutional push and guarantee were needed, by allowing Catalan economic and political powers to have a say in Barcelona El Prat\u2019s management. Monday\u2019s announcement has questioned this participation.

The former plan was meant to bring \u20AC5.3 billion

The former Spanish Government, run by the Spanish Socialist Party and chaired by former Prime Minister José Luís Rodríguez Zapatero, presented its plan to privatise the management of Spain\u2019s two main airports before the elections. The measure was meant to bring a large amount of money to Spain\u2019s treasury; \u20AC5.3 billion over 20 years. Despite the privatisation, the Spanish Government was still the owner and still has a decisive majority in the management boards, despite the presence of local economic and political powers. Catalan powers asked for less involvement from the Spanish Government and for having more room in the decision-making process. Nine days before the Spanish Elections, the former Spanish Government announced the exact management boards. In addition, he announced a three month extension to the tender\u2019s deadline, since the seven groups presenting offers were having problems to find the money on the international markets.

A relative decentralisation of Barcelona\u2019s Airport management

Barcelona Airport\u2019s Management Board would have a majority of members appointed by the Catalan public administration and the business community, although any decision would have to be agreed with the members appointed by AENA, the Spanish Airport Authority. The Board would have a total of nine members, four of which would be put forward by AENA. The rest would be Catalan: two would be appointed by the Catalan Government, one by Barcelona City Council, one by representatives of the Barcelona Metropolitan Area, and one by the business community. This latest member would be \u201Ca person with recognised prestige\u201D and would be agreed by local business people. Now, this board model is cancelled.

A public board supervising the private operator

The Management Board would have been in charge of supervising the work of the private operator, and to define the airport\u2019s strategic guidelines. Decisions would have needed a two-thirds majority (six votes out of nine), although the most important decisions might require a three quarter majority (seven votes out of nine). This way, neither the Catalan members, nor AENA\u2019s had the power to decide unilaterally. The Management Board would decide on airport taxes and tariffs, slots and routes, as well as investment. This plan has now been cancelled.

A \u201Chomogeneous\u201D model with all the Autonomous Communities

The new Spanish Minister for Public Works and Transport, Ana Pastor, explained that the previous model defined by his predecessor \u201Cwas incompatible with the new model of airport management\u201D. The new model the ministry she runs has started to work on \u201Cfrom this last weekend\u201D foresees \u201Cthe competition of all Spanish airports with European airports\u201D, and not \u201Cthe competition\u201D between Madrid Barajas and Barcelona El Prat, she said. However, she did not provide details about the new model. In fact, the new Spanish Government refuses to deal with Madrid Barajas and Barcelona El Prat separately to the rest of Spain\u2019s airport network. Furthermore, Pastor said she foresees \u201Ca homogeneous model\u201D across Spain, with the participation of all the Autonomous Communities. She did not clarify if the economic weight of the Autonomies, the importance of their airports or their own will to participate in the management of their airports would be included.

Ana Pastor: \u201Cit is not advisable to continue with the process\u201D

Pastor\u2019s plan is \u201Cto increase the value of AENA\u201D (Spain\u2019s Airport Authority) and, later on, allow for the entrance of private capital. Pastor argued that she had stopped the entrance of private capital in 2012 as \u201Cit is not the right time\u201D to have \u201CAENA\u2019s undervalued assets put on the market\u201D. In fact, the former minister already delayed the  deadline by three months as the seven private groups presenting offers found problems finding funding due to the lack of liquidity and credit. \u201CThe current market conditions are clearly negative and it is not advisable to continue with the process, as the number of competitive offers might be reduced and the price for both concessions could even be reduced. This would mean a loss in terms of image and of asset value, which would be impossible to get back\u201D, Pastor explained.

Catalan parties are vigilant

The Catalan Minister for Public Works, Transport and Sustainability, Lluís Recoder, stated that he was not opposed to delaying the entrance of private capital considering the markets\u2019 current situation. However, Recoder insisted on Catalan economic and political powers participating in the management of Barcelona\u2019s Airport. Furthermore, he stressed the need to continue working to consolidate Barcelona El Prat as a hub for intercontinental flights. The \u2018number two\u2019 of the Centre-Right Catalan Nationalist Coalition (CiU), which runs the Catalan Government, Josep Antoni Duran i Lleida, complained that a decision affecting the future of Barcelona\u2019s Airport should have been discussed with Catalonia\u2019s Executive. After hearing Pastor\u2019s decision, Pere Navarro, the leader of Catalonia\u2019s main opposition party, the Catalan Socialist Party (PSC), feared a recentralisation Spain\u2019s Airport model \u201Cprofiting from the economic crisis\u201D. The Left-Wing Catalan Independence Party (ERC) criticised \u201Cthe Spanish Government\u2019s contempt\u201D towards the Catalan Executive and reminded Catalan citizens \u201Chave to pay for draining High Speed Trains and airports across Spain\u201D. Furthermore, the Catalan Green Socialist Party (ICV) said \u201Cit is very worrying\u201D that the Spanish Government has not clarified Catalonia\u2019s participation in its airport model, while talking in general terms about \u201Ca participation of the Autonomous Communities\u201D and about a \u201Chomogeneous\u201D model. Finally, Barcelona City Council thinks it is \u201Cunacceptable\u201D to take any step back in the decentralisation of Barcelona El Prat\u2019s management.

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  • An image from Barcelona El Prat's Terminal 2B (by R. Pagano)

  • An image from Barcelona El Prat's Terminal 2B (by R. Pagano)