May 25, 2012

No wonder Spain is seizing up

This blog has banged on about Spain's rackety economic set-up, with its powerful regions only fitfully under central control, and some small towns going bust, while its construction boom was notoriously rampant.

Today from The Telegraph we can learn where more of the money has gone - and keeps going. Somehow the country has contrived to build 47 state-run airports.

Yes, 47. Some of them are fully staffed and operational even though they have no scheduled flights.

At all.
  • Badajoz airport, near the Portuguese border, saw its last commercial flight take-off in January.

  • In Huesca, a town in northern Spain billed as the "gateway to the Pyrenees", local authorities have subsidised the rare passengers flying in, just 2,781 of them in the whole of 2011, spending an estimated €1,600 on each traveller through its terminal last year. The fully staffed terminal, including numerous restaurants, is open year-round even though the commercial flights bringing skiers to the region only operate during the winter months.
Twenty airports handle fewer than 100,000 passengers a year, well below the estimated half a million they need to be profitable.

The company running the state airports is to close 30 of the 47 - partially.

Spain also has two private airports - doubtless financed by borrowed money.
  • Ciudad Real, which opened in 2008 with the expectation of becoming the capital's second airport to rival Barajas to the north, was cut from scheduled routes in October last year due to a lack of demand from passengers.

  • In Castellon, the town's airport inaugurated in March 2011 at an estimated cost of €150m, has yet to have a single plane touch down on its runway.
We can speculate how the state airports were paid for. Could some of them be from EU funds - that is, partly ours? For airports financed by borrowing, those loans will have to be repaid.

Whoever pushed the schemes through, how could anyone have thought 47 airports would be profitable? It didn't make political sense for them to think too hard, refusing to build them would doubtless have cost local votes.

So that's another example of how rackety Spain's economy is under the bonnet.

Spain is issuing short term paper, "but this is no way to fund a government and they are running into massive redemption risks next year as the IMF has begun to warn".

P.S. Shares in Bankia have just been suspended. And the most draconian spending cuts on record are plunging Spain’s cities and highways into darkness as ministries and mayors struggle to pay for basic services.
In some stretches it looks like they’ve been switching off the lights, in others they are missing the bulbs or the cables,” says Pascual Cabello, 32, who runs a fleet of eight trucks.

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