How a plane-less airport spent 30 million euros on ads

Public firm continued publicity spend despite doubts over Castellón’s future; massive statue of former provincial chief goes ahead

LORENA ORTEGA – Castellón – 08/01/2012

Over 30 million euros have been spent advertising Castellón’s airport, which is not yet operational and faces an extremely uncertain future after the regional government rescinded its agreement with the contractor that was supposed to run it.

This expense, undertaken in 2003 when the construction project got underway, was repeatedly criticized by Sindicatura de Comptes – the Valencian Audit Office – which noted that all agreements were being signed “without accrediting the need for the expense nor determining the price of the contract,” and without analyzing the possible benefits for the airport itself, which is located in Castellón province, in the northern portion of the Valencian region.

The news comes shortly after the Valencian government had to be helped out by Madrid authorities to ensure it would not default on a maturing loan of 123 million euros owed to Deutsche Bank. The move underscored the liquidity problems of the most indebted of Spain’s 17 semi-autonomous regions, with a debt-to-GDP ratio of 19.9 percent.

To many people, the “airport without airplanes” has come to symbolize the wastefulness of Valencian officials in recent years, when the real-estate bubble fueled a series of oversize projects of questionable economic value.

Since then, there has been a steady trickle of cases of money squandering by Valencia’s public agencies, including Emarsa, a water treatment plant that was allegedly used by its managers to divert millions of euros to their own accounts. In this case, it was also a public company, Aeropuerto de Castellón SL (Aerocas), which made the decision to spend over 30 million euros in sponsorships, fairs and advertising events even though it was always unclear whether the airport would ever become profitable or even operational, given that the nearby provinces of Valencia and Alicante already have their own airports.

Despite the uncertainty, Aerocas sponsored sports teams such as first-division Villarreal CF, whose soccer players bore the logo of Castellón Airport on their shirts for three straight seasons in exchange for 2.35 million euros. The sponsorship was later extended to another soccer team, CD Castellón.

Aerocas admitted it cannot determine what the economic return on its investment will be, and instead talks about “an assumed risk.” Until now, managers held that the airport had to make itself known in order to attract tourists and secure agreements with the airlines. This last job was going to be carried out by the contractor with whom the regional government has just broken its deal.

Last week, the chief of Castellón province, Javier Moliner, announced that this year the airport would not be advertised at Fitur, a major tourism fair in Madrid, because “we need to promote what we have and not what we’re going to have.”

As a matter of fact, the future of Aerocas itself is up in the air after regional authorities said it would be merged into a holding to reduce public spending. Since its creation, Aerocas has doubled its personnel expense, which went up from 148,115 euros a year for three employees to the current 382,216 euros a year for a staff of seven.

In the meantime, Aerocas is continuing to build a 20-ton, 25-meter-high sculpture at the airport entrance at a cost of 300,000 euros. According to its creator, Juan García Ripollés, the inspiration for this statue is the man who masterminded the airport project in the first place: Carlos Fabra, the provincial premier of Castellón for the last 16 years who stepped down last June. Fabra, of the Popular Party (PP), is being investigated for tax fraud, influence peddling and bribery of public officials.

via How a plane-less airport spent 30 million euros on ads · ELPAÍS.com in English.

The Generalitat must pay to attract flights to Castellón in 2012

The arrival of low-cost airlines at the new airport will occasion a significant outlay from the Valencian coffers. The Generalitat are committed to spend around € 600,000 in the first year to subsidise the arrival of the 300,000 passengers that it expects in its first year of operation.
The operator now has a firm agreement with the British airline Jet2.com to start operating from 2013  and is negotiating with a dozen companies to fly into Castellón, among others, Ryanair and Wizz Air. The Irish company, has proposed ten weekly flights with routes to Charleroi (Belgium) and Bergamo (northern Italy), is asking for a public subsidy of between five and six euros per passenger. Wizz Air, that has its headquarters in Budapest and operates mainly in Central and Eastern Europe, asks for two euros.
The public investment could be even greater and reach 700,000 euros a year if you compare the numbers of passengers to Reus, an airport of similar characteristics in location and size, to that of Castellón. The Catalan airport received 3.5 million euros in aid in 2010 and attracted 1.4 million passengers, as reported by the National Competition Commission, with its main carrier being Ryanair. Thus, the 300,000 users of Castellón could attract between 600,000 and 700,000 euros in public funding in their first twelve months of operation.

Russian tour operator shows interest in Castellón.

The local press report that the Tourist board has made further progress in attracting visitors to the province of Castellón and that the airport could receive in excess of 100,000 passengers next year.
Members of the Castellón Tourist Board, along with representatives from the airport attended the World Travel Market (WTM) recently held in London.  With 200 countries and 6,000 exhibiting companies represented, WTM is one of the world’s leading events for the tourism industry.  Andrés Martinez, second vice president of the Diputación de Castellón and deputy for tourism pointed out that we’ve had the opportunity to meet and network with almost all countries that are part of our tourism market.  Martinez said the excellent prospects that have opened in the Russian and English markets with the launch of the airport and possible routes to those countries . An opportunity that will allow us to position the Castellón brand in these markets and also two other priorities, the German and Belgian, along with the French market, that remains the largest.
Martinez, stressed that the Russian market is booming and shows great interest in the fate of Spain.  President of Marina d’Or, Jesús Ger, negotiated with the tour operator Natalie Tours for the arrival of about 55,000 Russians between next year and 2013.  The tour operator has expressed interest in selling more than 20 hotels across the coast of Castellón once the airport is operational.  One of the main meetings was with the directors of the Jet2.com airline that operates mainly from cities in the north of England and that has its own tour operator showing great interest in the province of Castellón and the airport once it is open.
Castellón Airport is now thought to be close to achieving the arrival of one third of the passengers planned for 2012. The final feasibility study calculated the arrival of 309,140 passengers for the inaugural year, 2012,.  Based on agreements so far with tour operators and negotiations with several airlines, next year could already bring about 100,000 visitors to Castellón.  In addition to the 55,000 Russians can be added the already announced arrival of the Austrian tourists visiting the province in spring in the Senior Program Reisen, plus an undetermined amount of FIB music fans.
These travellers will arrive on charter flights, to which could be added more than 70,000 who would arrive in the dozen flights whose negotiations are advanced.  This figure was derived by multiplying the number of flights carrying an average of 114 passengers.  Pedro Gimeno, the vice president of the company managing the site, Concessiones Aeropuerto, said that we are in negotiations with many companies and many tour operators.  They are working for the number of flights and passengers, but are still are unable to confirm how many.  However, recognizing  that negotiations are well advanced with four companies, among which are Ryanair, Wizzair and Jet2.com, whose flights may arrive in the summer of 2013.

Castellón Airport steps up efforts to bring in airlines.

Aerocas, the public company that manages Castellón Airport, has been intensifying efforts to have flights when it expects to open in April 2012.  According to company sources, contacts have been made with half a dozen of firms with the aim of launching flights in April. Efforts were especially intense at the World Routes Fair in Berlin, which promoted 800 airports and 300 airlines around the world. The provincial Tourism office has also negotiated with international tour operators to bring charter flights to the airport. Furthermore, it points to the arrival by air of 25,000 Austrian pensioners, next spring, through the agency Senioren Reisen. It was intended to do so this campaign, but  the delay in opening forced them to divert flights to Reus and Manises. The provincial government had to bear the costs of the transfer by road to Castellón.
With the current crisis it is not an easy task.  Existing airports such as Lleida, Huesca and Ciudad Real, with little traffic, can attest to that. Reus will also become an airport without flights in the new year until operators renew their summer flight schedules.
Aerocas maintains its forecast of 600,000 passengers for the first year of operation but the  Ministry of Tourism recently  halved this expected  figure to 300,000 passengers.
In the meantime the company will see it’s budget for 2012 reduced by 58% as the provincial government starts its austerity programme. It will receive 34.9 million euros, 38 million less than in 2011 despite its launch scheduled for the first half of 2012. The airport plans to start flights in the first half of 2012 and reach full activity in 2013. Their objective, as stated in the budget, is to strengthen rural tourism.

Spain’s white elephants – how country’s airports lie empty

Only 11 of Spain’s 48 regional airports are profitable and its newest project has yet to see a single passenger through its terminal.

Castellón Airport

The gleaming new air traffic control tower shimmers in the midday heat, visible for miles around, it rises up above groves of orange trees in the agricultural region of Castellón, north of Valencia.

But it has yet to guide a single aircraft onto the 3,000 yards of virgin runway at Spain’s newest airport, inaugurated in March at a cost of 150 million euros (£130 million).

The metal clad terminal stands empty, its vast car park untarnished by a single vehicle, weeds growing up through the pavements, the only sign of life.

It is the newest example of infrastructure “white elephants” that litter the Spanish countryside, huge projects often funded by taxpayer money that helped drive Spain’s economic boom and that have come to symbolise the wasteful spending contributing to its spectacular bust.

Castellón Airport promised to be a gateway to an undiscovered region, providing jobs for locals in a country struggling with 21 per cent unemployment rate, and delivering tourists tempted by cheap deals to some of Spain’s most beautiful white sand beaches.

But six months after its completion it has yet to be awarded an airport license – a fact many attribute to political differences between the Conservative-run region and the socialist government in Madrid – still yet attract the attention of the low-cost airlines deemed so necessary for its success.

The fate of another of Spain’s airports will do little to encourage investors in Castellón. Next month Spanish low cost carrier Vueling will cease to operate routes from Ciudad Real airport, 125 miles south of Madrid in Castile-La Mancha.

“Low profitability of the routes, increased cost of aviation fuel, and the stagnation of the Spanish economy have forced the decision,” the airline said in a statement.

With only two flights a week it was the only commercial airline left operating.

The airport, the first privately-owned venture in Spain although publicly subsidised, opened in December 2008 costing close to 1 billion Euros and with the ambition of becoming a cargo and passenger in the shadow of the capital’s Barajas airport. It was even called Madrid South.

But far from meeting its target forecast of 1.5m passengers a year, it managed only 100,000 in 2010, and saw airlines including Ryanair, Air Berlin and Air Nostrum drop it from their routes as unprofitable.

Last year the company that ran the airport went into receivership owing millions to contractors, and leading the Bank of Spain to take control of the regional savings bank Caja Castilla La Mancha which bankrolled the project.

Under specially negotiated employment contracts all airport personnel, even its executives, rotate with three months on the job followed by three months at home on the dole.

Another example is Huesca airport, opened in 2007 in the shadow of the Pyrenees in northeastern Spain, regional authorities hoped to attract skiers to its slopes, even subsiding the now defunct Pyrenair.

Seeing only 6,228 passengers in the whole of 2009, one report stated that each passenger cost the public coffers some 700 euros (£600) and last year its losses amounted to 6m euros (£5.2m).

The last commercial flight departed in April, the next is not due until January. But the fully staffed airport still attracts visitors – locals drive out to the airport to dine in its air-conditioned cafés and restaurants.

During the height of the construction boom, authorities rushed to take advantage of low-cost airlines, to plan new airports and open up hitherto unknown regions to northern European tourists.

But of the 48 regional commercial airports built in the debt-ridden country in less than 20 years, only 11 make a profit.

As part of a series of austerity measures designed to wrench Spain out of its deep economic problems, Socialist Prime Minister Jose Luis Rodriguez Zapatero promised partially to privatise its airports. Negotiations are still under way.

Back in Castellón, residents are not at all surprised at the fate of Spain’s newest airport.

“I always thought it was a stupid idea to build one here when we are less than one hour from Valencia airport and I was right,” confessed Vicento Bore, a 78-year old pensioner playing cards with friends in the tranquil square of Vilanova d’Alcorea, a village with 700 inhabitants less than two miles from Castellon airport.

“To think that we were worried about all the noise of suddenly being in a flight path,” he laughed. “What a joke.”

By Fiona Govan, Castellón 8:45AM BST 05 Oct 2011

via http://www.telegraph.co.uk/news/worldnews/europe/spain/8807723/Spains-white-elephants-how-countrys-airports-lie-empty.html

Castellón Airport to open April 2012

Aircraft will not be taxiing on the runway of Castellón airport, at least until April next year.  The announcement was made last week after the plenary meeting of the Valencian government  by spokesperson, Lola Johnson.  That is, a year after the opening fanfare by Francisco Camps as president of the Generalitat and Carlos Fabra as president of the Diputación de Castellón. This opening date is far from that intended by Juan García Salas, the president of Aerocas, who announced last July that the site would open in December or January 2012.

The airport collects 25 million loss without even being operational

Aerocas, the public society of Castellón Airport closed the year 2010 with accumulated losses of 25.2 million and a total debt of 95 million even before planes begin to operate in the Vilanova installation.  This is reflected in the General Accounts of the Generalitat Valenciana of 2010, which also warns in its external audit that the decline of the assets of the entity placed the company in a “legal course of dissolution.” According to that report, the entity has a negative net worth of -22.2 million euros, being below fifty percent of the share capital, so it is within one of the causes of dissolution listed in Article 363 of the Companies Act of capital.

The deputy EUPV, Marina Albiol, has criticized the data published in the General Account of the 2010. For Albiol, it is “completely absurd” that an “airport without planes nor permits maintain at December 31, 2010, bank borrowings of long-term credit worth almost 54 million euros and has spent seven million euros in advertising “. She considers “incredible and outrageous” that the CEO of Aerocas is paid  total remuneration of 84,200 euros per year given that it is an empty and useless infrastructure.  Albiol indicated that in total 382,215.66 euros has been spent on salaries, wages and social security.”

Opening of Castellón airport edging nearer?

One of the main issues that Alberto Fabra, the new president of the Generalitat Valenciana, had on his desk when he took up his post was the future of Castellon Airport. The Consell through the public company Aerocas , has now made ​​the  payment of 2.8 million euros to Concesiones Aeroportuarias for the equity loan that will enable them to resume the work that had been stalled due to non-payment by the autonomous government.
It was the deputy of Tourism, Andres Martinez, speaking to reporters who announced that Fabra had told him that he had now resolved the most urgent debt with the private company that manages the facility.  For his part, the director general of Aerocas, Juan García Salas, confirmed that the payment of 2.8 million euros has now been made ​​to effect the equity loan, that should have been resolved before the end of March.
This is a new step in the complex framework that has become Castellón airport. With this transfer, the management company can now  pay the constructor, that had paralyzed the remaining work required to comply with current legislation.  These are mandatory remediation works reqiuired by EASA (the Aviation Safety Agency) to  give an opening permit. Aerocas maintain that the airport will be able to receive flights by the end of this year or early 2012.
This 2.8 million payment remedied only part of the amount that the Generalitat owes to Concesiones Aeroportuarias, bearing in mind that the global amount ascended to 22 million euros. Therefore there still remains an amount outstanding of almost 18 million euros, corresponding to the modified work, price revisions and cost overruns of the project.  Marina Albiol, the EUPV deputy , criticized the 2.8 million euros payment to Concesiones Aeroportuarias. She warned that the whim of Carlos Fabra could end up like  Ciudad Real  airport, deserted .  She also asked the President of the Generalitat, Alberto Fabra, to ponder if it is really necessary to assume payments like this in a time of crisis.”
The tourism sector of  Castellón has all it’s hopes deposited in the launch of the airport before the end of this year  in order to increase the number of foreign tourists in 2012 . The president of the Ashotur (Provincial Association of Employers of Hospitality and Tourism Castellón), Carlos Escorihuela, described as “excellent” news that the Consell has paid part of the debt that unlocks the remaining works of the airport.  He noted that the commissioning of the facilities is essential to design next year’s tourism campaign.  The tourism sector is concerned about the consequences of any further delay in opening the airport could affect the tourism campaign in 2012 and the customer base that is trying to build for the new airport. In addition to what the setback that could mean for Aerocas, the tourism industry fears that the delay may also affect its strategy of attracting tourists and the reputation of Castellón as a tourist destination in an increasingly competitive market. In fact, the Chamber of Commerce Castellón Airport Forum has now been created to bring together the hoteliers and plan for next year’s tourism campaign. The forum aims to unite efforts for the existing tourism offer, coordinate relations with management and collaboration in the commercial management of the airport.

Ryanair to close base in Reus

The huge popularity of Ryanair allows it to continue playing hardball with Spain’s regional airports.

The Irish airline announced this week that it will withdraw its base, and therefore its fleet from Reus, having failed to reach an agreement with the Government and institutions of the province of Tarragona. “Today is a sad day for Ryanair, after multiple attempts to close a deal beneficial to both parties, we have been forced to make this decision,” argued the company vice president Michael Cawley.  The airline blamed the Catalan government and Tarragona authorities for its decision.  “Unfortunately, these institutions have repeatedly failed to comply with commitments to support and help the development of the Ryanair base in Reus,” airline vice president Michael Cawley said in a statement. Cawley has accused the Catalan government alleging lack of capital to support the agreement, “and then it gives 20 million euros to Spanair, a company near bankruptcy.”

Ryanair said that since November 2008 it had used the airport in Reus, south of Barcelona, as a base for three planes in summer and one in winter. It planned to close the base on October 30.  Ryanair operates 28 routes, 24 domestic and four international from Reus and despite its departure in October, the low cost airline will continue to operate routes from the airport near Tarragona in the summer of 2012 with aircraft based at other airports.

With the departure of the three planes that make up the Reus fleet , will also disappear around 150 direct jobs and 500 indirect, of the existing  1,300 now in the airport.
Ryanair regretted the loss of jobs but was prepared to consider re-opening the base if it obtained “reliable guarantees” that the authorities would abide by contract agreements, he added. An airline spokesman declined to say how many jobs were affected.

This latest development opens new possibilities that the company could now operate from the new airport in Castellon.

Castellon Airport has still not requested the permits to fly

An article yesterday  in El País claimed that almost three months after the inauguration of the  airport  the essential documentation to request permission from the Ministry of Development for flights to start remains in the capital of La Plana . According to the airport there are “thousands of documents and plans” that have not yet been sent to Madrid for approval due to “lack of interest” by the Valencian Government.
Aerocas, the public company managing Castellon airport began last month to submit documents to the State Agency for Aviation Safety (AESA) of the Ministry of Development that must supervise and approve the documentation for authorizing flights within six months, according to the brand new Air Navigation Act. The half-year period could be longer as time stands still until the airport officials remedy any error or deficiency identified by the technicians of the state enterprise.
So far, according to the airport, documentation has been sent regarding the safety of the infrastructure and the operation of the fire department, among other issues. However the essential documentation still has not been sent to Madrid.
These sources foresee that it would be difficult for planes to land before Christmas. This further delay puts at risk the the 2012 campaign to capture tourists to the region. The campaigns for next summer take place in the Autumn making it almost impossible to broker deals to bring passengers if the airport still lacks permission.
Leaders of PP of Valencia and Castellón quickly diverted criticism to the central government for a perceived lack of political will of the government of José Luis Rodríguez Zapatero.

Further delay to the operation of Castellón Airport

The coming into operation of Castellón airport is being delayed still further due to the lack of funds of the Generalitat.  The government of Francisco Camps owes 17 million euros to Concesiones Aeroportuarias, this corresponds to the non-payment of 11 m euros for delays in the works, plus 4 m euros for the extra costs of the project and a further 2.4 m euros for the final payment of the loan taken to finance the infrastructure.
On 23 March, the President of Aerocas, Carlos Fabra, and those responsible for the private company Concesiones Aeroportuarias signed a new contract that put an end to the conflict between the two parties and the threat of a public rescue.  Fabra expressed his gratitude to the President of the Generalitat, Francisco Camps, for giving “absolute power” during the negotiations but two months later the confidence Camps has not been translated into money and the contract signed by Fabra lacks validity because the Generalitat has not fulfilled its financial commitments.  That agreement forced by the demands of banks, substantially improved the conditions to the concessionaire, as the Generalitat (through Aerocas) guaranteed to cover any losses over the next eight years. It also pledged Aerocas to pay before 31 March the remaining part of the equity loan that was granted to finance the project. But it has not complied.
Gerardo Camps, the economic vice president, yesterday admitted this debt, but aserted that the Consell will make this payment before the end of the month or early next.  Camps also acknowledged that the 15m euros owed to Concesiones Aeroportuarias in respect of delays and cost overruns in the work should have been paid in December.
The situation of pre-bankruptcy that the airport is passing through for non-payment of financial obligations is a delaying the application to the Ministry of Development for permits to fly .  The experts of AESA, the Air Safety Agency,  insist upon some minor works to fulfill the requirements established by the Air Navigation Act.  The lack of liquidity of the concessionaire due to the debt of the Government of Francisco Camps has hampered these works and therefore have not been able to claim the permissions so that the airport is operational.