It was a triumphant return after a 14-year absence when on March 28, 2011, Spanish airline Iberia resumed a regular service between Madrid-Barajas International Airport (MAD) and Los Angeles International Airport (LAX) for the first time since 1997.

Flights are scheduled to depart three times a week, on Mondays, Wednesdays and Saturdays, in the only direct service between Spain and the US West Coast.  An additional Friday flight will run between the months of July and September, according to Iberia officials, who expect 68,000 travellers to use the new LAX–MAD service during its first year of operation.

To boost its chances of attracting these numbers, the airline will offer connecting flights between LAX and other Californian airports in Fresno, Sacramento and Santa Barbara, along with Honolulu in Hawaii, as part of a codeshare agreement with American Airlines.

The service is part of the recent business alliance between American Airlines and International Airlines Group (IAG), the Anglo-Spanish airline company formed in the January 2011 merger of British Airways and Iberia. It’s also one  of the earliest signs that BA and Iberia  are now starting to ‘work as one’, say market commentators.

“We are very happy that Iberia is returning to LAX after a 14-year absence,” says Gina Marie Lindsey, executive director of Los Angeles World Airports.

“The non-stop route between Los Angeles and Spain will strengthen business, tourism and cultural ties with one of the most desirable cities in Europe, while providing connecting service to additional destinations.”

Madrid’s changing hub status

If Madrid is “one of the most desirable cities in Europe”, its airport is surely one of the most admired. It is now just over five years since the Spanish prime minister, Jose Luis Rodriguez Zapatero, formally opened its enormous Terminal 4, the work of internationally renowned architects Antonio Lamela and Richard Rogers. The terminal’s flowing roof structure, use of vibrant colour and wide, open floor spaces have won Madrid-Barajas much critical acclaim. Crucially, the airport has the capacity to handle up to 70 million passengers per year.

That kind of passenger volume, however, is unlikely to be reached any time soon. In 2007, passenger numbers at Madrid-Barajas may have hit an all-time high of 52.1 million, but the effects of the worldwide economic recession soon saw them dwindle to 50.8 million in 2008 and to 48.4 million in 2009.

Last year, however, Madrid-Barajas witnessed the first signs of a recovery as numbers crept up almost 3% year-on-year to reach 49.8 million. Miguel Angel Oleaga Zufiria, the airport’s managing director,  says he is optimistic that they will reach  51 million in 2011.

“Although 2008 and 2009 were very difficult years for us, as for all airports worldwide, it is now clear to me that there are good times ahead,” he says. “With the 2006 expansion, we practically doubled the size of the airport and now is the time for us to look to the future and take advantage of our capacity.”

Landing new routes

New routes and carriers will be vital to that strategy, he says, and he is keen to stress the airport’s solid track record in doing so: “Ten years ago, Iberia accounted for 80% of our passengers. Five years ago, Ryanair didn’t fly to or from Madrid at all,” he points out.

Today, Iberia accounts for 40.6% of passengers, while Ryanair is in second place with close to 10%. Next in line are  Air Europa (9.4%), Spanair (6.6%) and easyJet (5.8%). Other airlines, meanwhile, account for the remaining 22.6%.

“We are open to any airline and we  try to work with every airline to give them what they need. Low-cost carriers are happy to be here and we are happy to have them here,” says Oleaga. Low-cost airline NIKI, for example, has just launched a non-stop daily shuttle service between Vienna and Madrid.  

“Our routes are successful because we have the right package for both business travellers and holidaymakers. In the case of Madrid in particular, I am confident that the introduction of direct flights from Vienna will help us to increase passenger volumes,” says NIKI owner, Niki Lauda.

Room for growth: Asia and Middle East

One area where Oleaga admits there is room for improvement is in Madrid’s ability to attract more traffic from Asia. “We are the principal point of entry for passengers travelling from Latin America to Europe, and we have good connections with North America, but our links with the Far East are not very good, so that’s where we’re going to try to improve,” he says.

A glance at Madrid’s 2010 passenger traffic by geographic area confirms this: passengers from Asia and Australasia accounted for just 0.4% of the total last year, compared with 10.8% from Latin America and the Caribbean, 5.9% from North America, 37.7% from Spain itself and 40.7% from elsewhere in Europe.

The Middle East, meanwhile, looks like another challenge – but an opportunity, too. While the region contributed just 1.3% of total passenger traffic in 2010, the launch of a new non-stop route between Madrid and Dubai by Emirates in August 2010 promises further growth from the region in 2011.

“The interest in previous years in us starting a service to Spain has certainly been reflected in strong forward bookings,” said Salem Obaidalla, Emirates’ senior vice president of commercial operations for Europe and the Russian Federation, at the official announcement of the route’s launch.

And in September last year, Iberia launched a twice-weekly service to Oran in Algeria, adding to its five-times weekly service to the country’s capital Algiers.

Americas remain core focus

Recent new routes announcements, however, have continued to focus more  on Madrid’s geographic mainstays of North and Latin America and have been led by its principal carrier, Iberia. There’s that new service to LAX, for example, plus the recent announcement of additional Iberia services over the summer between Madrid and New York JFK, from 14 to 17 weekly.

In February 2011, meanwhile, Iberia began a new route from Madrid-Barajas to Recife, which includes a stopover in Fortaleza. Both cities are thriving holiday destinations and increase Madrid’s connections with a country experiencing huge economic growth at present: Madrid-Barajas now has 72 weekly direct flights to Fortaleza, Recife,  Rio de Janeiro, Salvador de Bahia and São Paulo, operated by Air China, Air Europa, Iberia and TAM Lineas Aereas respectively.

Improved passenger experience

Regardless of their destinations, however, Madrid-Barajas is working hard to provide passengers attracted by new routes, as well as existing ones, with an excellent travel experience, says Oleaga. High-value VIP customers have been a particular focus, with the launch of new Fast Track facilities in both terminals 2 and 4 in the past year. In Terminal 2, KLM-Air France, Air Europa, SAS and TAP Portugal all offer this service and it is available for Iberia and Emirates passengers in Terminal 4.

Passengers with restricted mobility are another important priority: Oleaga is extremely proud of the fact that Aena recently scooped an ‘Ability Award’ from Spanish telecommunications giant Telefonica for its work in making travel easier for passengers with disabilities.

Impact of mega airline merger

Right now, it’s not clear what effect the  BA/Iberia merger will have on routes development at Madrid. Oleaga will say  only that closer coordination of services offered by both carriers promises “better opportunities and choices for passengers”, but recent expansion of the two airlines’ codesharing agreement offers no clues as to the potential for entirely new routes. Since April 1, the ‘BA’ code appears on Iberia services to Central America, Mexico and South Africa; and the ‘IB’ code will appear on BA flights to Mexico, Middle East and South Africa.  

In November 2010, however, once shareholders had approved the merger, Iberia chairman, Antonio Vazquez, told reporters that the new company’s plan focused squarely on the room for expansion at Madrid-Barajas and that there were plans to turn it into a hub for flights between Latin America and Europe. To some extent, it’s already there – but there is clearly great opportunity in Latin American markets, where air travel is growing exponentially and far ahead of the pace seen in struggling North American and European economies. At the same time, both BA boss, Willie Walsh, and Vazquez have acknowledged the onerous restrictions imposed by Brazil, among other countries in the region, which prohibit foreign airlines from taking majority stakes in domestic carriers.  

Madrid-Barajas faces other uncertainties in the year ahead. Rumours continue to swirl around Ferrovial’s interest in buying the airport (along with Barcelona El-Prat airport); deep concern persists over the general state of the Spanish economy and the possible need for a financial bailout from the European Union and International Monetary Fund; and, perhaps more imminently, there is the very real threat of proposed industrial action by government workers, including air traffic control staff, during the important Easter and summer seasons.  

But Oleaga insists his focus, for now,  is simply to maintain the airport’s newly revived growth trajectory. “We are very optimistic about 2011. Very optimistic indeed,” he says.