May 13, 2009 / 3:54 PM / 11 years ago

Spain's PM offers to waive airport fees for airlines

MADRID, May 13 (Reuters) - Spain’s prime minister on Wednesday proposed 240 million euros ($327.6 million) a year in support to airlines, the latest in a flood of initiatives to combat the country’s worst recession in 60 years.

Spain’s Iberia IBLA.MC and other airlines serving the country, such as British Airways BAY.L and Germany’s Lufthansa (LHAG.DE), would have their airport charges waived in return for boosting passenger numbers under the proposal.

Airlines would have 100 percent of their monthly airport fees waived if they manage to equal or increase 2008 passenger numbers.

Socialist leader Jose Luis Rodriguez Zapatero has proposed a string of economic stimulus measures during Spain’s two-day State of the Nation debate, including support for the car industry, tourism, tax breaks for small businesses and an end to tax rebates on mortgages.

“The airlines now have an incentive (to raise passenger volumes) throughout Spain,” Zapatero told Congress.

Spanish passenger traffic in March plunged 18.9 percent year on year, figures from airports operator AENA showed, as recession-hit travellers cut back on travel.

Spain is expected to be the last European Union member to return to growth, probably in 2011, according to the European Commission.

Spain’s tourism industry, the second largest in the world, is feeling the pinch as the global recession keeps foreign visitors, such as British and German tourists, at home while Spaniards rein in restaurant and hotel spending.

The sector is worth about 11 percent of gross domestic product, making it Spain’s second most important sector after construction.

The country’s once-thriving construction sector has been hit hard by the credit crisis, and unemployment is now the EU’s highest at over four million, or 17.4 percent.

Measures to diversify the economy and support demand have drawn flak from opposition parties who are pushing for long-term structural reforms.

The conservative opposition Popular Party said on Wednesday it would oppose the proposal to end tax breaks for home buyers earning over 24,000 euros a year, arguing it would hurt the country’s middle class.

Reporting by Andrew Hay and Paul Day; Editing by Jason Neely

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