Spanish airlines are more accused of the virus due to their dependence on tourism | Business

A traveler on T4 of the Adolfo Suárez Barajas Airport in Madrid.
A traveler on T4 of the Adolfo Suárez Barajas Airport in Madrid.Rodrigo Jiménez / EFE

The airlines operating in Spain have suffered more than the rest of their European counterparts from the hit of the coronavirus, mainly due to dependence on tourism and its weight in the Gross Domestic Product, but other factors such as the erratic policy of the Government in relation to to the sector, the unknowns about the rescue of Air Europa and the corporate uncertainty of Iberia, the old Spanish flag line, whose membership of the Spanish-British group IAG leaves it in a delicate situation after the United Kingdom left the EU.

The data is disheartening. Between January and November, 72.2 million passengers passed through Spanish airports, 71.9% less compared to the same period of the previous year, and the year as a whole is expected to end with a decrease of around 75% . And the most worrying thing is that the trend worsens month by month since the lockdown was lifted in June. After a black summer, in which traffic fell by 75% between the months of July to September, both included, the restrictions imposed by many countries such as the United Kingdom to prevent their citizens from traveling to Spain led to an autumn and winter still worse, with decreases in travelers from abroad of over 90%.

As a consequence, and against the prophecies of the gurus who predicted that the pandemic would bring the end of the era low cost In favor of greener (and expensive) flights, a bidding war has been unleashed to attract the few and fearful passengers who can still afford to fly. The prices of passenger air transport fell by 6.2% in the third quarter – in the middle of the summer – compared to the same period of 2019, its biggest drop since 2008, according to the latest data from the National Institute of Statistics (INE ).

After three months with almost the entire fleet on the ground, airlines timidly reactivated flights in June and launched aggressive discount campaigns in summer that have been diluted with the restrictions of the second wave of covid-19. The average occupancy of the airlines peaked at the end of July (61%) and is now below 50%, which complicates the profitability of the companies, with a collapse of the average income per passenger. Companies such as Iberia, Air Europa or Ryanair, drowned by quarantines, the economic crisis and the fear of flying, have already launched their campaigns for 2021 with reckless discounts and all kinds of facilities such as one-year bonuses or free date changes.

The sector does not see the end of the tunnel. For this reason, it asks for clear sanitary rules in the face of the uncertain policy adopted by the Government of Pedro Sánchez, on whom the Foreign Health depends. In summer, despite the president’s call “not to be afraid of the virus” and “enjoy the new normal”, he did not know how to coordinate safe corridors with the most tourist-emitting countries such as the United Kingdom or Germany as requested by the tourism sector, from the employer Exceltur to the ALA airline association. And after refusing for months to establish the requirement of tests at airports (claiming that there was not a considerable incidence among travelers), he lurched and, since the end of November, he has demanded PCR tests from international tourists – the most expensive and less immediate. -, compared to the antigen tests – faster and cheaper – demanded by the sector and even socialist regional governments such as the Canary Islands.

“What we are demanding from the tourism sector are homogeneous measures. We believe that the position of the European Commission is the right path. The deployment of rapid tests (antigens) in airports of origin in a harmonized manner in all European countries, starting with Spain, would help to regain confidence and restore air connectivity that would undoubtedly lead to the improvement of tourism, as well as of the commercial flows associated with business trips and, consequently, with the economic recovery of the country ”, indicates Manuel Ambriz, commercial director of Vueling.

Unlike the governments of countries such as Germany, Italy, France, the Netherlands or Portugal, which have come to the rescue of their former flag airlines (Lufthansa, Alitalia, Air France-KLM and TAP, respectively) taking a majority stake in the shareholders, the Spanish Executive has limited itself to providing loans with the endorsement of the Official Credit Institute (ICO) with the sole exception of the rescue of Air Europa.

Opaque rescue

The Government approved last November the injection of 475 million euros of public money into Air Europa on behalf of the solvency fund aimed at supporting strategic companies that have been impacted by the covid-19 pandemic. Previously, last May, the airline had obtained a loan of 140 million euros guaranteed by the ICO. The rescue, as the Sepla union has denounced, suffers from a lack of transparency, since neither SEPI nor the Hidalgo family airline have made public the feasibility plan whose presentation is required to have access to aid. With a loss forecast of € 500 million in 2020 alone, and a final profit of € 27 million in 2019, it is almost impossible for Air Europa to be able to return those 615 million from taxpayers within five years, another condition of the rescue.

To do this, it will have to turn to an external partner such as Iberia if IAG finally completes the purchase of the airline agreed in November 2019 for 1,000 million euros, but which it is renegotiating downwards since the outbreak of the pandemic. Negotiations of which, despite the Sepi having two advisers in Air Europa, no details are known either except for interested leaks. The unions of crew members and pilots fear that behind this silence there are drastic plans for labor adjustment, which the Government will find it difficult to justify after the injection of public money.

For now, Ryanair has filed an appeal with the Court of Justice of the European Union (CJEU) against the rescue of Air Europa, considering that it is “illegal state aid” and wonders how an airline like the Hidalgo family which barely has 5% of the Spanish market, led by Ryanair, can be considered “strategic”.

Iberia and Vueling, the IAG group’s Spanish-based airlines, must also decide in the coming months whether they have a free hand to operate in European airspace after Brexit, demonstrating as required by community regulations that a majority of shareholders of the UE to keep your license and your current flight rights. Both IAG and Iberia have always defended that they comply with this ownership requirement, but the truth is that they have a large shareholder base of UK funds and their largest shareholder is Qatar Airways, with 25%, which does not leave so much Of course, EU investors are the majority. For the moment, they have the approval of the Spanish Government, which, through the Spanish Air Safety Agency (Aesa) and the Civil Aviation Authority, have approved the Spanishness test before the summer of that year.

The future, in the air

No one dares to forecast the future, but airlines are hopeful that after the vaccine, the recovery will begin to show. “We are confident that demand will return strongly once a large part of the population has access to the vaccine. We believe that there is a restrained demand for both business and leisure travel. People are eager to leave the pandemic behind, travel again, see the world, visit their family and friends and resume business as before the pandemic ”, Emirates Director for Spain, Monika White.

The profile of the traveler will also change. Business trips are going to be cut in the era of teleworking and tourism, also plagued by the economic crisis, will take time to resume the record figures of 2019. But not everything is negative. “We will be more digital. The customer wants now more than ever to control the process if possible from his mobile. Perhaps some consumption habits will be reduced in the face of the pre-crisis situation, but we believe that others will emerge, such as the nomadic teleworker. As with all big changes, the long-term effects are not yet clear. Of course, we are optimistic about the human need to discover the world with our own eyes and connect in person with friends, family and business partners, ”says Ambriz from Vueling.