Tuesday, February 7, 2023
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TAP Air Portugal May Need Subsidies For Some Loss Making Routes

The Portuguese flag carrier is receiving flak for favoring Lisbon over other regions in the country.

TAP Air Portugal is facing heat from certain quarters in the country for the way it is planning its network. The carrier received the all-clear for a €2.55 billion (US$2.87 billion) restructuring plan in December 2021 by the European Commission, but it seems that it requires more subsidies to sustain certain routes.

Criticism

TAP Air Portugal has come under criticism for giving too much attention to Lisbon and shifting its focus away from other regions of the country. Voices of disapproval are particularly strong in the north of the country, which feels that the Portuguese flag carrier is too Lisbon-centric.

On Saturday, it was reported that TAP would operate seven fewer routes this year and offer 705,000 fewer seats from Porto Airport compared to the summer season of 2019. This prompted the airline to announce on the same day that it had, in fact, doubled the number of flights from Porto compared to last year (a 98% increase), with the reinforcement strategy coming into effect in April and remaining in place until the end of summer this year.

However, this did little to convince the mayor of Porto, Rui Moreira, and several other parties, that TAP is being run fairly.

The carrier has come under criticism for favoring Lisbon over other regions in the country. Photo: Vincenzo Pace – Simple Flying

Government’s response

Portugal’s minister for infrastructure and housing, Pedro Nuno Santos, has explained his point of view on why the airline is operating certain routes the way it is. According to him, it all comes down to maintaining a balance between the absolute need and profitability of the routes.

According to the Portugal Resident, the minister commented,

“It is one thing to understand that there are routes that are public service routes that should be financed, but it is another thing to think that a public company, because it is public, should run loss-making routes.”

“If there are unprofitable public service routes, there should be public subsidisation. But we have to understand what they are.”

The minister cited the example of the trips from the archipelagos of Madeira and the Azores to the mainland, which he feels are rightly subsidized as it ensures that citizens of the autonomous regions can fly to the rest of the country. Santos added that the carrier could operate other such routes successfully only when they are supported by the government.

Even though TAP currently operates fewer flights out of Porto than in the pre-pandemic days, Santos defended the airline’s position saying that “TAP is recovering flights and its presence in Porto and is the only one that connects Porto to the other side of the Atlantic.”

Portugal’s minister for infrastructure and housing, Pedro Nuno Santos feels that some of TAP’s routes need more subsidies to operate profitably. Photo: Vincenzo Pace – Simple Flying

Restructuring plan

The €2.55 billion aid that has been given to the airline comes with certain conditions. As reported by Simple Flying earlier, in return, the European Commission requires TAP Air Portugal to forego 18 daily slots at Lisbon for competing airlines, in which a transparent and fair selection procedure will determine the competing airline in question.

It seems that more discussion is needed from all the stakeholders involved to decide how best TAP can operate out of underserved locations across Portugal.