(This article originally appeared in the print edition of The Ibiza Sun 11/01/12.)
On October 21st the local press confirmed the rumour that the Ryanair winter flights to Stansted, Milan Bergamo and Dusseldorf Weeze were being stopped. As surprising as the actual decision to cease flights was the late timing of the announcement, given the ramifications for those who live in Ibiza or visit the island on business or pleasure during the winter months.
It smacked of the type of brinkmanship Ryanair boss Michael O’Leary is known for so the knee-jerk reaction of many was to lay the blame firmly at his door. After all, everyone loves a good moan at Ryanair, don’t they? And having no winter flights has certainly given us all plenty to moan about: Long waits at Barcelona, Madrid or Palma airports on a round trip, which now usually involves at least four flights with all the additional cost and inconvenience that entails. Just before Christmas, an Ibiza Sun reader wrote in to say it took nearly as long and cost almost as much as getting to New York.
Yet before we all stick pins into our Michael O’Leary effigies there are a few facts that need clarifying. As soon as the announcement was made a ‘We Want Winter Flights‘ petition was launched, from which a pressure group called Ibiza Conectividad has been formed. The Ibiza Sun has very kindly allowed our group to share these findings with you, so have a look inside at our special feature and prepare to be surprised, shocked and downright infuriated as you discover not only the implications of the withdrawal but that the blame can be laid much, much closer to home…
A press conference and public meeting is being held at the Diario de Ibiza building near the National Police station on January 20th if anyone feels like expressing their views after reading this article.
To get a clearer idea of why a subsidy is needed, one has to understand a little of the economics of how low-cost airlines operate. In simple terms, when there is high demand for a route the prices are higher, when there is low demand, the prices are lower. Whilst in previous years most of the Ryanair winter flights were near full, they were full because seats were sold cheaply.
Quite a few of those who signed the petition added that they would be prepared to pay more for flights, yet seemingly, not enough were prepared to do this when the route was operational. Ryanair’s head of European marketing told us, “If this were the case then we would have been able to get stronger yields.”
The economic reality is that international winter flights to Ibiza have always run at a loss so any airline flying to Ibiza needs the government to offer a co-marketing agreement to underwrite potential losses. The previous PSOE government signed a four-year agreement with Ryanair in 2008 to fly to Stansted, Milan Bergamo and Dusseldorf Weeze. The first three years of this subsidy came to 1.1 million Euros and the final installment of 420,000€ was due to be paid this year. It is this payment that the new PP government reneged on, which led to Ryanair no longer being able to operate the routes.
Clearly, our parochial focus is on the most popular of these routes, the Ibiza to Stansted one. Ryanair has informed Ibiza Conectividad the subsidy required to operate just this route would actually be even less – in the region of 200-250,000€.
Of course, Spain is one of the more vulnerable Eurozone economies so tourist minister Carmen Ferrer’s initial justification that the government could not afford to honour the Ryanair subsidy seemed both economically valid and politically expedient.
Yet scratch slightly beneath the surface and this is far from the truth. Politically, this isn’t about upsetting a few non-voting guirris who can no longer pop back to the UK with the same convenience they used to. Economically it is about having a dramatic effect on island businesses and the long-term reputation of the Ibiza brand; it affects the pockets of native Ibicencos just as much, if not more than those of the ex-pats. It is about the hypocrisy of claiming not to subsidise airlines for winter flights when there is proof it happens. It is about the stupidity of wasting more of taxpayers money on a program to get Brits to come to the island in the winter and then announcing the program cannot run… because there are no flights to service it, with the cost of that program being more than the Ryanair subsidy to bring those flights to the island.
Carmen Ferrer is in print as saying that one of the reasons for reneging on the Ryanair deal is that she hadn’t seen any evidence of more establishments staying open in winter. This statement is probably about as well thought out as Michael Fish announcing, “there won’t be a hurricane” in 1987 (and potentially as damaging). At least Fish’s conclusion was based upon some kind of data whereas even someone who failed their Economics GCSE and walked around Ibiza with a bag on their head can see that Ferrer’s conclusion must be based upon nothing more scientific than sticking her finger in the air or asking her neighbour’s cat.
Without trying too hard we have found hostals that were near full during winter weekends last year that now only have sporadic bookings; bars and restaurants that are significantly quieter than previous winters or indeed, have given up altogether.
And even if there wasn’t any immediate evidence of hotels etc. staying open then that shouldn’t come as a surprise as these things take time; a momentum needs to be built up. One of the reasons Dubai has been so successful is that they sorted their airline first so visitors could actually get there. Confidence that a route will be around for a number of years and not suddenly have its plug pulled for any reason (such as playground politics – is it just a coincidence the agreement with Ryanair was an existing PSOE policy?) is an absolute pre-requisite.
Also, it is not just the obvious frontline tourist industries like hotels and restaurants that are affected.
One sector suffering most is property. When low cost airlines like Ryanair and Easyjet have pulled out of provincial European airports, property prices and the local economies have been affected dramatically. Although it is still possible to get to Ibiza via indirect flights, it does not make us immune.
A case in point is Mick Silver and his wife Abi from Hertfordshire, who spent last winter renting a villa in Ibiza, looking to move over here permanently before Christmas 2011. They had seen a property they liked for just over a million Euros and were in the throes of finalising negotiations when they heard the rumour that there may be no direct winter flights.
“Although the plan was to move to Ibiza I still have business interests in the UK,” says Mick, “so it was essential that I was able to go back to the UK at least two or three times a month with relative ease.”
Once it was confirmed that there was to be no direct winter flights. Mick made the difficult decision to postpone his plans and stay in the UK. The result? An instantly measureable loss to the government of best part of 100,000€ in property taxes (the house incidentally, remains unsold). It needed major renovation, so local builders and suppliers have also lost out. He was going to buy a thirsty people carrier from a local dealer, which would have run on petrol from local garages. Their three children would have gone to local schools, would have been fed and clothed from local shops; friends would have come and visited and eaten in local restaurants and shopped in local supermarkets, etc. etc. (sure you get the picture). And that is just one family!
Another 35 year-old who asked to remain anonymous was about to buy a 300,000€+ apartment but needed to be able to get back to the UK at least once a week. His decision on hearing there was no longer direct winter flights to the UK from Ibiza? To buy in Majorca.
Given these were instantly at hand examples from a quick conversation between two people it begs the question – how many others are there? Never mind the loss to the local economy, the loss in property tax alone probably runs into if not millions, then certainly far, far more than the 250,000€ it would have cost to subsidise Ryanair’s flights. No winter flights also means that properties are less desirable, which brings their price down (the last thing the property market needs in the current climate) and means pro rata less taxes for the government if and when they’re sold. And it’s not just property owners who are affected. The money from the sale of the majority of those properties would find its way back into the island’s economy.
The winter inaccessibility of Ibiza is making life more difficult for those trying to set up deals for summer too. As the epicentre of club culture, many of the negotiations responsible for the island’s summer success are made during the winter between promoters, clubs and all associated businesses, a large number of which are UK based. Whereas in previous winters they have been held in Ibiza and Ibiza has benefitted from these (often wealthy) visitors, they are now being held in places like Madrid or Barcelona because it makes absolutely no sense for those in the UK to travel for ten hours to get to a meeting then another ten hours to get back.
In the above examples we have barely scratched the surface as to how not having direct winter flights to the UK is having an adverse affect on locals and their businesses. No doubt people reading this can think of many more. The economy is in desperate need of stimulating and no direct winter flights to the UK is having exactly the opposite effect. The Partido Popular are in the main, implementing a raft of very positive policies aimed at helping local businesses, yet by withdrawing winter flights they have scored a spectacular own goal.
Another major justification for not paying the subsidy is that Ferrer didn’t want to give Ryanair an advantage over other airlines. Really? Then why is the government paying Veuling and Air Europa each a six-figure just to start their summer flights a month earlier? We’re still waiting for her to come back to us on that one.
Equally damaging to how the lack of flights is contributing to stagnating the economy is the effect on the Ibiza brand internationally. Below is a holiday destination chart from Google of the top ten holiday destinations based upon query volumes. Ibiza is seventh.
Could you imagine any of those other resorts not having direct flights from the UK all year round?
The other top ten destinations spend hundreds of millions between them creating awareness via advertising and PR. Ibiza spends virtually nothing. Why? Because it doesn’t have to. Ibiza is famous worldwide primarily as a result of its clubs and its electronic music scene. The island’s empresarios are effectively doing the government’s job for them in this respect. Fine. No complaints there as the clubs etc. are doing very nicely as a result. Yet seeing as the government doesn’t have the PR or advertising outlay of these other resorts surely there’s an argument that they should therefore be able to find the money to ensure people can get to Ibiza to do all of the other non-clubbing related activities they seem so desperate to want to encourage?
When it does actually spend money on advertising, it does so with a complete lack of joined-up thinking that shamefully wastes taxpayers money. And it’s not just the PP, it’s a cross party problem. A few years ago, the PSOE infamously spent a reputed 100,000€ advertising Ibiza on the side of London buses. The only problem was it insisted on using the Catalan spelling, Eivissa, so hardly anyone who saw the adverts knew to where they were referring.
About the same time there was an advert in GQ magazine with a young couple studying a map with Dalt Vila in the background. It had the strap line, “Ibiza – island of culture.” Sorry? Whilst Ibiza has a history to be proud of people don’t come here for that. If they want culture they go to Greece or Rome. If they want to see two numpties looking at a map they go to Milton Keynes.
In November there was a Daily Telegraph, thirty-two page Ibiza supplement. It focused on nature, history, art, traditional festivals and sports like kayaking, hiking and diving. All very commendable, although the 250,000€ the Diario de Ibiza reported it cost could have been better channeled into something like, oh, maybe subsidising Ryanair so people can actually get here to do those activities. Given how hotel and rental prices rocket in summer, Ibiza is hardly going to be the first choice for a kayaking or hiking holiday between June and September, is it?
Then there was the Ibiza Slow Breaks program, aimed at getting people to Ibiza during the winter and largely focused on the UK. Carmen Ferrer has just announced that it is being postponed until March. The reason? No direct flights. The reputed wasted cost to taxpayers? Three hundred thousand Euros, slightly more than it would have cost to subsidise the flights to enable people from the UK to actually get here.
At the recent prestigious World Travel Market in London, the resorts on that Google list and many others had some truly glorious stands. Needless to say you could have walked by Ibiza’s without giving it a second glance. Yet again, not a mention of the club scene that has made it so popular, nor the world’s most famous sunset or award winning beaches. One sometimes cannot help but feel that Ibiza is like a beautiful woman, desperately trying to deny the very thing that makes her so appealing. (As a side note, at times the stand wasn’t fully manned – the reason? Those attending had trouble getting there as a result of no direct flights).
Look carefully though and the clue to Ibiza’s fundamental problem is contained within that Google list. Ibiza is in 7th position, Majorca in 8th. On another Google list, this time for Air Travel Destination Analysis, Ibiza is 12th, Majorca 32nd.
Ibiza’s travel budget is controlled by Majorca. This is like Roberto Mancini asking Alex Ferguson what players to buy: They are our rivals. Short-haul destinations are growing in popularity and we should be getting more of the pie. The problem? We have no voice. Even Formentera has more clout as they have their Unio de Formentera and Majorca has its Unio Mallorquina. All we seem to have is apathy.
A Santa Claus hat wearing O’Leary recently gave a press conference to announce that Ryanair are opening their 49th base, creating 2800 jobs from 17 new routes from March 2012 to go with the 30 the already have. Operating from…
Ibiza Conectividad were forwarded a letter from the same Michael O’Leary just over a month ago when one of Ibiza’s leading clubs mooted the idea of a joint marketing venture that had a real worth of well into six figures to try and make inroads into the 200-250k Ryanair said they needed as a subsidy. O’Leary’s terse reply clearly indicated just how unhappy he was with Ibiza going back on the original deal.
And therein lies the dynamic: The irresistible force meeting the immovable object. Ibiza has had it too easy for too long. A cosy old boys club has existed with long established tour operators but now someone like O’Leary has come along who plays the same kind of hardball. And they don’t like it. In Spanish it’s the orgullosos, the macho pride.
Ibiza needs a voice. Majorca is like Julio Iglesias; big, established, a history of success and tradition whereas Ibiza is more like Enrique; funky, dynamic and as far as the modern world is concerned, much better known and likely to become ever more famous. If Ibiza doesn’t step out of Majorca’s shadow then rather than our island growing in the way it should, those with a vested interest in stifling that growth could eventually extinguish the spark altogether.
Ibiza MUST HAVE direct winter flights.
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