Ryanair will make a return to Reus Airport and increase activity at Girona if AENA doesn't raise taxes

Barcelona (ACN).- Ryanair and the Catalan Government have reached an agreement concerning the Irish low-cost airline’s activity at Girona-Costa Brava Airport and Reus Airport. After having completely abandoned Reus this winter and drastically reducing its activity at Girona-Costa Brava last summer and this winter, Ryanair has decided to return to the situation it was in prior to the ten month disagreement it has had with the Catalan Government. Both parties disagreed over the conditions under which Ryanair should continue operating at both airports. The low-cost airline started to fly from Barcelona Airport in September 2010. On Wednesday both sides in the dispute announced that they had reached a solution. It will come into effect in April 2012 and Ryanair has guaranteed that in the first 12 months it will transport at least 3 million passengers through Girona Airport and 500,000 through Reus Airport. The exact financial details remain confidential but the agreement foresees offering the airline a plot of land at Girona Airport for free to build a hangar, and another plot close to the airfield to build a hotel. Furthermore, Ryanair is committed to running a route linking Girona and Madrid, which was a special request from the local business community. However, the Irish airline stated through a press release that the agreement will be broken if the Spanish public airport operator and air navigation service provider AENA decides to increase “the already high” airport taxes of the two airports involved. AENA, which is managed by the Spanish Ministry of Public Works and Transportation, had not made any further statements at the close of business on Wednesday.

The agreement announced by Ryanair and the Catalan Government was welcomed by the business community in Girona, the Costa Brava, Reus, Tarragona and the Costa Daurada. They feared that there would be a negative effect on the local economy without the arrival of foreign tourists who land on the two regional airports on cheap flights offered by Ryanair. For instance, the Girona-Costa Brava Airport saw passenger figures of just 500,000 in the late 1990s. In 2003 Ryanair opened in Girona and, in 2008, the airport saw a record 5.5 million passengers pass through its gates. Ryanair operated 90% of the Girona-Costa Brava traffic in 2010.

The low-cost airline is very aware of these figures and negotiates with regional governments throughout Europe. It reaches economic agreements to operate through secondary airports, which mainly depend on its flights and the passengers the Irish company transports. Thanks to Ryanair, Girona is now connected to most of Europe for a low price. The formula for this economic miracle was due to the Catalan Government, the Girona Provincial Council and the local Chamber of Commerce who have paid money to the airline for the “promotion” of the area as a tourist destination. Ryanair has been receiving public and private money from local administrations and businesses. However, when the financial crisis hit, the number of air passengers fell and Ryanair profited from the AENA tariff policy and landed on Barcelona’s main airport.

Ten difficult months

Ryanair began to operate in September 2010 through Barcelona El Prat Airport, which is Catalonia's main airport and the second largest in Spain. Some weeks later the Irish company began negotiations regarding its presence at Girona and Reus Airports, both located some 100 kilometres from Barcelona city.

Ryanair’s negotiations coincided with a change of government in Catalonia, after the Catalan elections held in November 2010. The previous Catalan Government, run by a left-wing three-party coalition, had reached a pre-agreement with Ryanair after the elections regarding the Irish company’s activity in Girona from 2012. It foresaw paying Ryanair for the promotion of tourism in the area €11.5 million if it transports 4 million passengers per year. In addition, the airline would have ten planes based in Girona during the summer and six during the winter season. The previous agreement already in place in 2010, which was due to run until the end of 2011 and thus still in place, fixed the fee at €3.9 million if it transports four million passengers. After taking office at the start of the year, the new Catalan Government, run by the Centre-Right Catalan Nationalist Coalition (CiU), put the pre-agreement with Ryanair on stand-by. They asked the airline for some time to study it, arguing that there was an agreement already in place and that the Catalan public finances had to deal with the public deficit. Ryanair did not accept the arguments. In February, the airline reacted by announcing it was cancelling 28% of its summer flights operating from Girona, which meant breaking the agreement for 2011.

A gradual withdrawal from Girona and Reus

At that time the dispute between Ryanair and the Catalan Government became public. Over the last ten months, both parties have been in negotiations. Ryanair released public statements saying talks had halted or had also announced the cancellation of flights. In addition, there was a widespread public debate in Catalonia over which strategy to the Catalan Government should adopt for Catalonia's secondary airports and what they make of Ryanair’s demands. The Catalan Government, and the Catalan Minister for Transport, Lluís Recoder, received criticism by the other political forces on the issue.

Ryanair’s February announcement cancelled 28% of its flights from Girona during the summer season. This meant figures dropped from 4 million passengers per year to 2.3 million for 2011. The airline cut the number of routes from 64 to 46, and its Girona-based planes passed from 11 to 6. At the time, Ryanair estimated that the decision also represented the loss of 1,700 direct and indirect jobs.

Furthermore, in late July, the Irish company announced that it was cancelling 21 other routes from Girona, and cutting its fleet from six to only three aircrafts in the winter months. According to the company, the decision meant a 50% reduction in passenger traffic, passing from 2.6 million per year to 1.3 million, running 25 routes.

Another crucial moment had happened one month earlier, in late June, when Ryanair included Reus Airport. The low-cost airline announced that it would close its base at Reus during the winter months, completely abandoning the airport where it had three planes based permanently. On November 6^th, the last Ryanair flight left Reus, with serious doubts of a return to the airport next summer.

These three announcements in a period of five months meant that Ryanair went from having a good relationship with Catalonia, where it transported 4 million passengers in Girona and 900,000 in Reus to a drastic withdrawal leaving only a small presence in Girona and none at all at Reus. But at Barcelona El Prat, Ryanair has been increasing its presence since it first arrived in September 2010.

An agreement starting in April 2012 but depending on AENA

On Wednesday, Ryanair and the Catalan Government put an end to the bitter dispute they have had over the last ten months. Both parties have announced they have reached an agreement, which they hope will come into effect in April 2012. However, as Ryanair stressed, the agreement depends on AENA (the Spanish public body operating airports and providing air navigation services), which is managed by the Spanish Ministry of Public Works and Transportation. Ryanair stated that the agreement is conditioned to “the airport costs that AENA will charge from 2012 at Girona and Reus”; the low-cost airline added that “if AENA increases the already high taxes” at Girona and Reus, the agreement will be broken. Therefore, the new Spanish Government resulting from Sunday’s elections will have the responsibility of implementing the agreement reached by Ryanair and the Catalan Government.

The economic details of the agreement are “confidential”, the Catalan Government specified, following a request by the Irish private company. However, the Catalan public administrations will allocate €5.8 million to all airlines operating in Girona, but majority of the total will be for Ryanair. Some media were talking about €3.2 million for Reus, but it has not been confirmed. In addition, the Catalan Minister for Transport, Lluís Recoder, explained that Ryanair wants to build an aircraft maintenance hangar in Girona, on a plot of land that would be given to the airline for no fee. Recoder added that AENA is the owner of the land, but he is convinced that it will it “give its blessing to the agreement”. In addition, Ryanair would build a hotel close to Girona Airport in the future, a “decision that will be detailed soon”, said Recoder. The Catalan Minister stressed that these two projects are proof of Ryanair’s commitment to Girona.

With the new agreement, from April 2012 Ryanair would transport more than 3 million passengers per year through the Girona-Costa Brava Airport, with the aim reaching 4 million. In addition, the airline will recuperate the route linking Girona and Madrid, which was a claim by the local business community. Regarding Reus, Ryanair is committed to bringing 500,000 passengers per year from April 2012, which would represent creating 500 jobs in Reus. At both airports, the company would keep running in the winter months. The agreement will be managed by a council, involving the Catalan public administrations, local business people and Ryanair, in order to identify possible needs and issues that might need modification.