Spain Government Will Cut Aena’s Tariffs By 11% Over Five Years, Reducing Income By €850 M

AenaBarcelona airport, Spain

Spanish Prime Minister announced on Wednesday that there will be a 11% cut in airport tariffs until 2021. This means a reduction of 2.2% each year in 2017-2021, the period during which the new Air Regulation Document is valid. In order to reach this decision, Aena had suggested keeping the current tariffs while Spanish competition watchdog CNMC suggested a 2.02% cut. The decrease in tariffs will be accompanied by an investment of € 2.6 billion to boost the capacity of the installations and make them more competitive. The Air Regulation Document containing the final figures will be published this week after the cabinet meeting and the new tariffs will come into effect on March 1.

If this news is confirmed, it will not mean any substantial change to our valuation of the company, which had already factored in a tariff cut close to 2%. That said, the 2.2% annual decrease is slightly higher than the 2.02% cut proposed by the CNMC.

For Aena, any tariff cut means tighter margins, given that its costs structure is already very efficient after the company’s transformation in 2012-2014.

Although it estimates that a decrease in tariffs would reduce its revenues by €850 million over the next 5 years if the number of passengers remains stable, we believe Aena can reduce this negative impact. It already has the installed capacity available to continue to increase the number of flights and passengers, while the cut in tariffs will strengthen its competitiveness and its allure for the airlines which use its airports.

*Image: Flickr / Camilo Rueda López