ARCHIVED - Aena seeking 2.5 million in compensation for Corvera airport losses

Traffic in the Aena network collapsed during the Covid crisis

Image: The day the airport opened....

Ever since the Covid lockdown began on March 14th and the skies over Spain emptied as thousands of flights were cancelled and borders closed, it was inevitable that the travel sector would suffer in spectacular fashion, and the results of months of inactivity have already lead to slashed services, grounded planes, job losses and a worldwide gnashing of teeth as would-be travellers attempt to book flights which are frequently cancelled.

The monthly air traffic statistics published by airport operator Aena are eye-wateringly bad; June statistics start at the top of the page with a 96.5% loss of traffic at Barajas airport in Madrid and conclude with the International Airport of the Region of Murcia at Corvera which handled just 59 passengers (freight,medical flights, private planes) and is shown as having -100.0% loss of passengers during June.

Most of the figures in-between are in the high nineties, amongst them Alicante airport which also lost 98.1% of its traffic, handling just 28,739 passengers, the winners being the Canary islands which opened up for tourists earlier than the rest of Spain and “only” lost 89% of its passengers.

So it’s little wonder that airport operator Aena is looking anxiously at its financial position and seeking ways in which to compensate for its significant losses during lockdown, having lost 170.7 million euros during the first six months of the year.

At the weekend regional Spanish media La Verdad ran a piece about negotiations currently underway between the regional Government and Aena in its role as concessionary of the regional airport at Corvera, in which the paper reported that Aena was seeking 2.5 million euros in compensation for the losses sustained during the Covid lockdown.

“A financial re-balancing plan” was under discussion in order to support this “key infrastructure”, part of which included the extension of the contract to 25 years and negotiations about the payment per capita for passenger traffic over the level of one million passengers payable to the regional government which now owns the airport.

Long-term readers will remember the many hurdles which had to be overcome after the regional government agreed to guarantee a 180 million euro loan to the original constructor and airport concessionary which built the airport as a private business and then reneged on the loan by failing to open the airport and entering administration, leaving the regional government with an unopened infrastructure and a 180 million euro loan to pay for it.

The airport finally opened a year and a half ago following years of fights and legal battles with the former concessionary who had demanded a substantial subsidy to help it initiate activity, claiming that the economic recession which began in 2008 had rendered the original business plan for the installations inviable.

Aena took on the job as concessionary for the new airport which opened in January last year and although Aena maintains that it has been on target to meet its expectations has failed to reach the same traffic levels as San Javier airport which operated alongside the Air Academy to date.

The regional Government will itself be implementing a packet of measures designed to support the businesses operating within the airport installations and providing services, and is expecting that support for infrastructure such as the airport will be available to the region via the European Union Covid recovery Fund and economic support for the autonomous regions being supplied by the national Government.Other key strategic companies such as Renfe, airlines, Aena in its capacity as airport operator of the majority of Spanish airports and the Madrid Metro are already in line for funds from these sources.

The Legal Services of the regional government are, according to Verdad, examining the proposed amendments from a legal perspective and the negotiations are expected to conclude soon.

Loss of UK tourists and now UK flights are falling

On Monday the National Institute of Statistics (INE) published the June tourism figures (these are always 2 calendar months behind) which clearly illustrate the extreme challenges facing the tourism sector this summer; the number of foreign tourists entering Spain in June fell by 97.7% compared to June 2019, with only 204,926 tourists entering the country (borders only came down on June 21st for the mainland although the islands had opened a week earlier). Tourist expenditure fell by 98.6%, to 133 million euros.

In June of last year, 8.83 million foreigners made tourism trips to Spain, spending 9.6 billion euros.
The tourism sector had already forecast losses of 40 billion euros for this summer and expects to lose 83 billion euros this year in total.

So the news that the UK, the largest tourism market for Spain and accounting for over 20% of total tourism revenue and visitors was to impose a 14 day quarantine on anyone returning from Spain and the Foreign office would advise against all but essential travel to Spain has gone down like a bucketful of icy cold water in Spain.

The tourism sector reacted with a mixture of incredulity, anger and fear, accusing the British Government of trying to deflect attention from its own performance during the Covid crisis by seeking to blame returning tourists for the worsening situation in the UK, for trying to keep UK holidaymakers in the UK in order to boost its own domestic tourism sector this summer and some even went so far as to say that the UK was reminding Spain just how much money British tourists spend here as the final run-up to Brexit begins with many critical points of negotiation still unresolved.

Murcia is one of the worst-affected regions as it depends so heavily on British tourists with nearly half of all tourists from the UK (this figure used to be higher but the increase in cruise ship traffic which is from a wider base of countries has distorted the figure). It is quite normal for more than 80% of all flights through the airport to be from the UK in any given month, in spite of the best efforts of the regional government to bring in tourists from elsewhere, the British stubbornly remain its most loyal and dependable market.

Whatever the motivation, there is no doubt that the loss of revenue from British tourists for however long the ban continues (and given the rising figures in both Spain and the UK this is not expected to be over in the next few days) will hit both Spanish and Expat-owned businesses which operate principally in the main tourist areas hard this summer and for some who barely made it through the lockdown period and were hoping to replenish their coffers during the summer season, will be a deathblow.

As feared, a wave of cancellations for flights, hotels, villa rentals, car hire, car parking and excursions followed, posts on social media from those using airlines to enter Spain reporting half empty planes and terminals with more staff than passengers.

It’s only logical that airlines, which are themselves struggling to remain solvent will reduce the number of flights and divert planes to routes which are more likely to fill their seats, so when emails appeared en-masse in the editorial inbox on Tuesday advising that Jet2 had cancelled all flights to Corvera for the remainder of this year, it was not a surprise, although was still a huge disappointment given the distress and inconvenience for readers, many of whom have had multiple flights cancelled already this summer as they play a seemingly never-ending game of musical airlines trying to book seats for themselves or family visits. Some now have flights booked one-way with other airlines and for those who don´t hire cars and rely instead on public transport, the complications of trying to get to their destination in Murcia from Alicante airport will dissuade them from coming altogether (Jet2 is continuing to fly to Alicante).

Many would-be travellers have simply given up and report that they will not be visiting holiday homes this summer.

For Aena, this is another big blow at Corvera airport and although it pains to say it, there may be cancellations in the pipeline from other airlines who will be forced to prioritise commercial viability over the convenience of passengers and will contribute to a further decline in traffic through the airport.

Aena not ready to “throw in the towel”

Verdad reports that Aena is not ready “to throw in the towel” at Corvera just yet, hence the request to renegotiate the concession package and the determination of the regional Government not to permit the closure of a “key infrastructure” in the region by making concessions.The situation has naturally attracted vociferous criticism from the political opposition who were quick to point out the difficult history of the airport and the political background against which the original decision to guarantee the construction loan was made (the Paramount Park project which failed to find investors).

However, it’s the immediate future that is currently weighing heaviest on the minds of regional politicians, with the prospect of economic recession caused by the Covid situation a darkly looming shadow over the employment prospects for the region and the closure of the regional airport after so much money has been committed to it (180 million is still owed to the banks for the loan, plus interest) would not only be an acute political embarrassment, it would also threaten other jobs such as the 300 jobs promised for the Amazon logistics warehousing complex which is nearing completion in the industrial park being built alongside the airport.

There’s a lot at play, and Verdad reports that the regional government is keen to conclude negotiations relating to the financial re-balancing plan in the near future.

Aena will also negotiate the “rebalancing of its concessions” at Luton (London), Brazil and Colombia airports.