The Ministry of Public Works decided to get more competitive by deregulating the AVE train route to Levante and going public with 60% of Aena. These two deals were waiting on European elections to happen, but now they are set to go forward before Rajoy's term ends.
The timing is good because Renfe, run by Julio Gómez-Pomar, has a clean balance sheet even after adopting an aggressive price-cut strategy. Even with lower ticket prices, the company has increased its passengers significantly. Still, France and Germany are getting many more passengers per square mile on their AVE systems. Certainly, more competitive prices will encourage citizens to use this method of transport, which in some regions has already surpassed air travel. Right now, there is only one competitor in the high-speed rail business. The company is bidding on a route from Valencia, Alicante and Murcia and will have to pay a toll to Adif for rights to use the rails -- just like Renfe does. The advantage of rail over air is that trains can compete for the same time schedules. This will allow customers to get better prices and service.
Privatizing Aena will also be good for consumers as a burgeoning recovery allows the state to increase tax revenues that can help trim the deficit. Both deals mark the start of a process that will connect us to neighboring countries in new ways and lead to growth and economic development.
