The 75% Balearic residents’ discount may be capped or eliminated altogether if the Independent Authority for Fiscal Responsibility, or AIReF proposed are adopted.
AIReF has offered three scenarios, one of which is to limit the number of subsidised flights residents can take and force people to pay full price fares when they reach the maximum.
AIReF, which is chaired by Cristina Herrero, monitors the spending behaviour of the Government and Regional Executives and makes proposals to improve efficiency.
The Government requested a study of the 75% residents’ discount after Ministry of Transport spending soared from 324 million euros a year to 720 million euros when the discount rose from 50% to 75%. The study acknowledges that the personal Income Tax data of travellers is being checked to determine whether the system is being abused.
AIReF's report confirms that costs skyrocketed when the subsidy was increased and that almost half of the population of the Islands doesn’t benefit from the discount fares.
Subsidies
This implies that some residents of the Islands are accumulating more than 357.4 euros per year in subsidies while others get nothing.
The AIReF report offers three solutions: a fixed fee, a limit to the number of subsidised flights per year or an annual fixed subsidy that dwindles as trips are made.
It also estimates that by limiting the number of flights to the Peninsula where residents' discount can be applied, savings would amount to 26.4% for a maximum of 10 subsidised flights per year compared to 5% for 50 flights.
By limiting Inter-Island flights savings would amount to 23% for a maximum of 10 subsidised flights compared to 3% for 50 flights.
Another proposal from AIReF is to limit the total subsidy amount per person per year, which it claims would persuade residents to look for the cheapest flights.
A maximum subsidy of 500 euros a year would save the Government 21.2% on flights to the Peninsula and a maximum subsidy of 2,500 euros, would save the Government 1.7%, according to the report.
If the Government does decide to change the discount subsidy it would have to modify the Law of Special Regime of the Balearic Islands, or REIB.