Air connectivity between mainland Spain and the Canary Islands and Balearic Islands is under threat due to the non-payment of resident subsidies by the government. Airlines operating these routes have advanced up to €810 million through January 2025 to cover the 75% ticket subsidy for residents, according to a statement by Spain’s Airline Association (ALA). That figure could reach €1.5 billion in 2025 if the government fails to take action.
The subsidy for residents of Canary Islands, Balearic Islands, Ceuta, and Melilla on regular domestic flights is a state-funded aid managed by the General State Budget. Airlines act as intermediaries in the process, applying the subsidy discount at the time of ticket purchase and later settling the remainder with the Directorate General of Civil Aviation (DGAC). However, government payments have faced delays throughout 2024, leading to a growing debt.
"The budget allocated for air transport subsidies for residents of the Canary Islands, Balearic Islands, Ceuta, and Melilla is underfunded. The allocation in the 2023 General State Budget, which has been rolled over into 2024 and 2025, is completely insufficient to cover the 75% subsidies on airfares," stated Javier Gándara, president of ALA.
The government had allocated €560.81 million in the 2023 General Budget for subsidies to non-mainland residents, but this amount has fallen short of actual demand. In 2024, seat capacity between the Canary Islands and the mainland reached 61.81 million, an 18% increase compared to 2019. Meanwhile, routes between the Balearic Islands and the mainland offered 55 million seats, up 12.85% from 2019.
In addition to the debt owed to airlines, ALA reports that travel agencies have also been affected, as they have not received payments for the management fees associated with subsidized tickets.
ALA president Javier Gándara warned that “this situation is compromising the financial sustainability of these airlines to the point that, if it continues, it could make it unfeasible to operate some of these routes, seriously affecting connectivity for the Canary Islands, Balearic Islands, Ceuta, and Melilla, and consequently hurting their economic development and job creation.”
ALA is calling on the government to pay the outstanding debt to airlines as soon as possible and to address this issue in future budgets to ensure that the subsidies are adequately covered, avoiding what they describe as “budgeting miscalculations”, like those seen in 2023.
According to Diario de Ibiza, the government of Pedro Sánchez has declined to disclose the amount owed to each airline, claiming it's “sensitive information that could impact the economic interests of the airlines.”
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