Aena to apply 1.9% reduction in charges as suggested by the CNMC

Boeing 727-256 Advanced Aena (ex-Iberia) by Dawlad Ast - Flickr

In spite of the fact that neither Aena nor the Government have made any official announcement yet, this morning, ElConfidencial confirmed that Aena has decided to apply a 1.9% reduction in charges. “Not only will Aena apply a 1.9% reduction in airport charges  as Competition told them to do, but they will reinstate the incentives on new routes and increase of passengers as well”. The decision on the incentives has been made by Aena in light of the positive evolution of air traffic, expected to finish 2015 with a 5% increase in passengers. These incentives were removed by Aena in the original General Budget for 2016 that was presented by the Government at Congress in August. They had been removed as a consequence of the 1.9% reduction in charges that the CNMC had forced them to make.

ElConfidencial reports that the pressure from airlines on the CNMC, “mainly the main foreign low cost airlines”, was decisive for them to impose such a decrease for 2016. Furthermore, contrary to Aena’s interests, this reduction will be taken into consideration for the tariff freeze for the coming 10 years. Things might have been much worse for Aena if Competition had carried out their original request of a 10% reduction. After all, the reduction of 1.9% has been accepted by Aena as the “lesser evil”. However, Aena reserved their right to withdraw the incentives in exchange. This warning has now vanished: Aena informed the regulatory authorities that last week the board accepted the reinstatement of the incentives.

This decision was made considering the traffic evolution in the first half of 2015, which showed a 5.2% increase in passengers . Also, in August Aena had their all-time high in number of passengers. This improvement in the trends is emphasized in the Madrid airport that registered an increase of 11.4% in the first half of this year. During 2014, Aena’s incentives on new routes and increase of traffic meant 23.8 million Euros. However, Aena estimated that, keeping the incentives would suppose 74 million Euros. These incentives and the reduction in charges show “an infrequent generosity”, bearing the current times, and help heal the scars of the conflict with Competition.

Aena would still be able to avoid the price reduction by having the Government amend the General Budget before it is confirmed within the next days. Nevertheless, the information from ElConfidencial leads us to believe that there will be cheaper Aena prices in 2016 without an impact on the system of incentives.