Madrid Barajas Airport expansion to cost EUR2.4 billion; profitable AENA gets airport charges boost


There are few better examples of countries that are putting the COVID-19 pandemic behind them than Spain, where the airport operator AENA will probably record more passengers in 2023 than in 2019, both holistically and at its principal Madrid Barajas Airport.

Barajas will now be further developed, with a EUR2.4 billion investment into two projects covering all the terminals, although no new ones will be built.

Madrid is in an unusual position for a capital city of a large European country, in that there is only one commercial airport serving it and that is unlikely to change. But physically, Barajas is one of the largest airports in Europe, with space to expand.

The parent AENA has strong finances, and has been buoyed recently by dispensation within the law that governs it to increase charges to airlines in 2024 – those charges having originally been frozen as part of the privatisation process eight years ago.


  • A EUR10 million design project has been awarded at Madrid Barajas Airport.
  • Total investment on this and another project, together covering all terminals, will total EUR2.4 billion.
  • The rebound in passengers there is equivalent to that of other AENA airports, and the finances of that organisation are in a strong position.
  • Barajas has no competition, even from other AENA airports, and that position is unlikely to change.
  • Barajas remains the principal hub connecting Europe to Latin America.
  • The law under which AENA was partly privatised continues to influence the charging regime, with a surprise twist this year. 

Technical engineer and architects practice consortium awarded a EUR10 million expansion design project at Madrid Barajas Airport 

In mid Nov-2023 the Spanish airports operator AENA awarded to a consortium, in the form of a UTE (a Temporary Joint Venture) of Ayesa Ingeniería SAU and Estudio Lamela, a EUR10.85 million contract for the second phase of technical assistance for drafting the expansion project of Terminals T4 and T4S at Madrid Barajas Airport.

Expenditure on this and another project will amount to EUR2.4 billion

AENA also announced remodelling plans for terminals T1/2/3 – total investment in Madrid Barajas Airport's renovation estimated at approximately EUR2.4 billion (USD2.6 billion), of which EUR700 million is for T1/2/3 and EUR1.7 billion for T4/T4S. The execution of the works will be put out to tender later.

According to the CAPA - Centre for Aviation Airport Construction Database, that would make these projects combined the eighth largest in Europe by total investment commitment at an existing airport.

Ayesa is a global provider of technological and engineering services, founded in 1966. Its headquarters are located in Seville.

The Madrid-based architects practice Estudio Lamela was created in 1954 and is considered to be one of the main studios in Spain, specialising in residential and tourist architecture and with a track record in the airports sector.

Big and consistent rebound in AENA passenger traffic

The partially privatised (since Feb-2015) AENA (the largest operator in the world) has witnessed a rebound in traffic, and especially to its Spanish airports (it operates the vast majority of them), since 2022, when the worst of the COVID-19 pandemic was over.

AENA handled 240 million passengers across its airport network in the first nine months of 2023, which was up 17.4% year-on-year and by 1% compared to the pre-pandemic year 2019. AENA airports handled 216.6 million passengers in Spain, up by 17.6% year-on-year, with 280 million passengers expected by the end of 2023, up by 2% compared to 2019.

AENA Aeropuertos S.A. (ENAIRE): annual traffic, passenger numbers/growth, 2013-2023

AENA’s finances in a good place

At the end of 2023 AENA expects to have a consolidated EBITDA of more than EUR2.7 billion, with an EBITDA margin of more than 56% – compared to EUR2.1billion and 50% respectively in 2022.

AENA was consistently positive financially at the EBITDA level throughout the three COVID-19 pandemic years, but made operating and net losses in 2020 and 2021. It returned to profitability at all levels in 2022.

In Oct-2023 AENA closed its first bond issue in the European fixed income market for an amount of EUR500 million, maturing in Oct-2030. The transaction was five times oversubscribed, receiving orders from more than 180 institutional investors.

Madrid heading towards 61 million passengers for 2023

Madrid Barajas, formally 'Aeropuerto Adolfo Suárez Madrid–Barajas' after a Prime Minister, is AENA’s busiest airport by passenger traffic, with 61.7 million passengers at its peak in 2019 and with an estimated 61.3 million passengers for the calendar year 2023 (CAPA - Centre for Aviation calculation). After Paris Charles de Gaulle, it is also the second largest airport in Europe by physical size, at 3,050 ha (7,500 acres) in area.

It was the world’s 22nd busiest airport in 2019, falling back in 2020 and 2021 but recovering to take 15th position in 2022.

Madrid Barajas Airport: annual traffic, passenger numbers/growth, 2013-2023

Barajas is the only commercial airport serving Madrid

Barajas has no competition to speak of, or even other airports in the same group in Madrid (unlike many other capital cities in Europe), despite serving a population of 6.7 million in the metropolitan city-region.

The Torrejon and Cuatro Vientos airports respectively cater to business and general aviation.

In 2015 Spain's Ministry of Public Works agreed to fund the new airport project in El Álamo, Madrid, and in 2018 Spanish businessmen grouped to develop 'Air City Madrid Sur Airport', with a EUR148 million/USD170 million investment to expand the Casarrubios del Monte Airfield (El Álamo) as an LCC airport. Construction would begin in 2020 and the airport would have capacity for seven million passengers; it was due to be operational by 2023.

There is still a live website for this project; but it has not received the support it desired from the airlines, especially Iberia, and it remains very much in limbo.

Separately, the Ciudad Real greenfield project to build an alternative airport for the city, albeit over 200 km south from the capital but accessible from it by the AVE high speed rail network, opened in 2009 at a cost of EUR1 billion, but closed just three years later having been served by only two airlines. Various ownership battles took place thereafter until 2019, when it was acquired by Ciudad Real International Airport SL, which has turned it into a maintenance and storage base. Its commercial passenger days are probably gone forever, although there is a band of loyalists who continue to fight for its reopening to passenger flights.

Ciudad Real’s raison d’être was to be a low cost facility for Madrid, but during the interminable time it took to plan, promote and build it (as the owners had to jump through a succession of technical and environmental hoops) – T4 was constructed at Barajas, opening in 2006, and thus releasing space at the other three terminals, especially T1, for budget airlines, which rapidly proliferated.

T4 was later expanded to include a satellite, T4S.

Low cost capacity is on the low side; alliance capacity is high

Low cost capacity penetration currently stands at 15%, considerably less than the 70% at Barcelona, Spain’s second busiest airport, and with full service airline capacity at 83%. An argument could perhaps still be made in favour of Ciudad Real's existence.

At Barajas airport 80% of capacity is on aligned airlines, with 51% of the total on oneworld – the alliance which embraces both Iberia and British Airways, the principal airlines in the International Airlines Group (IAG).

The chart below shows how capacity is evenly currently distributed around the terminals.

Madrid Barajas Airport: system seats by terminal share, week commencing 20-Nov-2023

The main hub connecting Europe and Latin America

Barajas acts as a principal intercontinental hub connecting Europe with Latin America, as its route map (below) clearly demonstrates.

Madrid Barajas Airport network map for the week commencing 20-Nov-2023

What it also shows is a continuing comparative weakness in the Asia Pacific region and in Africa.

Capacity is 70% on flights of four hours or less

Moreover, despite numerous trans-Atlantic services offered by Iberia and Air Europa (which are the two largest airlines, with 64% of capacity between them), more than 70% of flights are of four hours or less, which usually means greater frequencies and the associated terminal planning that goes with them.

It was in Dec-2019 that AENA announced plans to expand significantly and to renovate the existing installations, increasing their yearly capacity from 70 to 80 million passengers and bridging the architectural gap between the original Terminals 1, 2 and 3 and the newer Terminal 4. The project had an original budget of EUR750 million and was set to be executed in the period from 2022 to 2026.

The pandemic evidently had an impact on that timing, with the work being delayed by two years.

The proposed projects fall within the auspices of the law which privatised AENA

The present day drafting of the technical assistance projects to the UTE Ayesa Ingeniería SAU and Estudio Lamela SA as described above falls within the current Airport Regulation Document (DORA 2), which covers the period 2022-2026 and will continue as DORA 3 from 2027 to 2031.

The original DORA was the law created to authorise the privatisation of AENA, and it also granted control over the charges AENA can set for airlines, initially for a five-year period (which has been twice extended), by the government, which remains a 51% shareholder.

The original key elements of the DORA, in 2015, were as follows:

  • The government was established as the aviation regulator, meaning the operator and the regulator are one and the same, even if the government’s shareholding is reduced to 49% or less;
  • It established the privatisation of AENA to a maximum of 49% of its equity and guaranteed the retention of a ‘net’ of airports in Spain. It did, though, take into account the possibility of closing or selling an airport under special circumstances;
  • The DORA should be the main regulatory and supervising tool of AENA S.A. It should establish specific guidelines for action;
  • Tariffs (charges to airlines) could not increase until 2025. They were effectively frozen at levels considered by the government to be appropriate to the fostering of competition among airlines, and the decision was reached owing to the efficiency levels achieved by AENA in the previous three years, the size and scope of the airport ‘net’, and the addition of modern infrastructure;
  • Airport infrastructure (CapEx) investment was limited initially to EUR450 million;
  • It ensured the regulation of tariffs in line with certain expenditure factors (Op Ex, CapEx etc.) and established a regulatory asset base;
  • The regulatory system would switch from single to dual till under a phased procedure.

A surprise increase in charges is on the cards for AENA’s airports

There have been developments since then, especially concerning the charging base.

In Feb-2022 Spain's National Markets and Competition Commission (NMCC) approved a 3.17% reduction in AENA's airport charges for FY2022, resulting in a rate of EUR9.95 per passenger. The Spanish Government had rejected AENA's proposal to increase charges as a means to recover EUR2.3 billion in COVID-19 related losses.

Surprisingly, the NMCC then granted initial approval of the 2024 tariff proposal from AENA, with an increase of 4.09% compared to 2023.

The tariff increase, which must now be formally approved by the NMCC, would be applied as of 01-Mar-2024.

AENA insights from the CAPA - Centre for Aviation analysis library

May-2022: AENA – riding the pandemic storm; back on track in 1Q2022 but challenges persist

Apr-2015: AENA’s part privatisation. By all accounts a success and shares climbed dramatically

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