Privatisation could cost us

Humphrey CarterMallorca11/08/2015 00:00

Earlier this year a group of directors of Ryanair were in Palma to unveil some new routes and their visit came just a few weeks after it was revealed that the low-cost airline had taken a look at the part privatisation of the Spanish airport authority AENA. Ryanair concluded “not to touch it with a barge pole.”

However, that was their conclusion as a potential investor in one of the largest airport operators in the world. But, they did explain that public/private management of airports does not automatically lead to a greater involvement from the local business sector and tourist industry nor does it mean cheaper operating fees which will translate into cheaper air fares.

It was clearly pointed out that private investors, and in AENA’s case one of the largest is the British fund TCI, The Children’s Investment, will want a decent return on their money. They will not be watching the rise, or preferably the fall in air fares, they will be watching what they hope will be a steady rise in the value of their investment.

So, based on logical business practice, the private investors will not want to start slashing operating fees, especially during the very slow winter months. And what could that mean?

Another hurdle in the battle to get more winter flights operating in and out of Palma airport. Even with the new government looking at ways to increase low-season air traffic, the big-money boys will have the last say.