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.

CNA / Gaspar Pericay Coll

January 23, 2012 11:10 PM

Madrid (ACN).- The new Spanish Government, run by the conservative People’s Party (PP), has halted the privatisation of Spain’s 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. “The entrance of private capital would come at a later stage”, once “the assets have increased in value”, 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’ 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 “undervalued”. The plan has been postponed in order to allow “the assets increase in value”. In addition, Pastor said that the new Government wants to maintain Spain’s airport network as one, as a “homogeneous model”. 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’s 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 –which later merged with Vueling–. Therefore, Madrid has become Spain’s 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’s “homogeneous model”, 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’s 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’s management. Monday’s announcement has questioned this participation.

The former plan was meant to bring €5.3 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’s two main airports before the elections. The measure was meant to bring a large amount of money to Spain’s treasury; €5.3 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’s deadline, since the seven groups presenting offers were having problems to find the money on the international markets.

A relative decentralisation of Barcelona’s Airport management

Barcelona Airport’s 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 “a person with recognised prestige” 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’s 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’s 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 “homogeneous” 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 “was incompatible with the new model of airport management”. The new model the ministry she runs has started to work on “from this last weekend” foresees “the competition of all Spanish airports with European airports”, and not “the competition” 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’s airport network. Furthermore, Pastor said she foresees “a homogeneous model” 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: “it is not advisable to continue with the process”

Pastor’s plan is “to increase the value of AENA” (Spain’s 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 “it is not the right time” to have “AENA’s undervalued assets put on the market”. 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. “The 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”, 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’ current situation. However, Recoder insisted on Catalan economic and political powers participating in the management of Barcelona’s Airport. Furthermore, he stressed the need to continue working to consolidate Barcelona El Prat as a hub for intercontinental flights. The ‘number two’ 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’s Airport should have been discussed with Catalonia’s Executive. After hearing Pastor’s decision, Pere Navarro, the leader of Catalonia’s main opposition party, the Catalan Socialist Party (PSC), feared a recentralisation Spain’s Airport model “profiting from the economic crisis”. The Left-Wing Catalan Independence Party (ERC) criticised “the Spanish Government’s contempt” towards the Catalan Executive and reminded Catalan citizens “have to pay for draining High Speed Trains and airports across Spain”. Furthermore, the Catalan Green Socialist Party (ICV) said “it is very worrying” that the Spanish Government has not clarified Catalonia’s participation in its airport model, while talking in general terms about “a participation of the Autonomous Communities” and about a “homogeneous” model. Finally, Barcelona City Council thinks it is “unacceptable” to take any step back in the decentralisation of Barcelona El Prat’s management.