AENA Chairman Juan Ignacio Lema stated Spanish air-traffic controllers “must” pay the EUR100 million (USD131 million) carriers are claiming from AENA, to compensate for damages caused when controllers abandoned their positions on 03-Dec-2010 and 04-Dec-2010 (Bloomberg/Typically Spanish, 18/19-Dec-2010). AENA and the air traffic controllers union, USCA, met on 20-Dec-2010 to decide how talks will proceed. Nine controllers called to face court in Santiago on 17-Dec-2010 refused to speak. Several controllers face prosecution for participating in a wildcat strike on 03-Dec-2010.
AENA and USCA to recommence talks
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AENA: Spain's airport operator must cut charges, but airline yields are already falling
After much delay, in late Jan-2017 the Spanish Council of Ministers approved the airport regulation document setting AENA's airport charges for the next five years. The headline numbers include a 2.2% annual decline in charges from 2017 to 2021, equivalent to an overall cut of 11% through the period.
The legal framework prevents tariff increases before 2025, but the outcome was in contrast with the Spanish airport group's own proposal to freeze charges. Strong traffic growth of 11% to an all time high level of 230 million passengers in 2016 may have influenced the regulator's decision.
In response, AENA has decided to remove an incentive mechanism which rewards airlines for traffic growth with airport charge discounts. The removal of discounts is estimated to offset the 11% reduction by one third.
In fact, this discount scheme has been quite effective in stimulating traffic growth in recent years. However, traffic growth in Spain was also boosted in 2016 by high airline capacity growth switched from other (risk) markets. Airline yield declines are probably noticeably heavier than AENA's regulated price reduction.
Avianca Brazil faces tough conditions and fierce competition on new international flights
Brazil’s fourth largest domestic airline, Avianca Brazil, has opted to branch out internationally with new service to Miami and Santiago, Chile, joining formidable competitors in each market that will compete fiercely with a new rival. Avianca Brazil’s competitors have significant strength in each market, with an ability to market vast network connections in conjunction with their partners.
Avianca Brazil’s decision to add international destinations occurs as its domestic growth continues unabated, despite warnings by its Brazilian rivals that overcapacity in the domestic market could threaten a slow recovery of yields that is just starting to take shape.
Avianca Brazil’s branching out into international markets occurs against the backdrop of a potential merger with Avianca Holdings. Each company is majority owned by Synergy Aerospace, but operates separately. After completing the evaluation of a potential merger with Avianca Brazil in 2014, Avianca is now reconsidering a potential tie up with the airline amid an ugly shareholder battle over Avianca’s pursuit of a strategic partnership with United.