THE Balearic Transport Federation is demanding an increase in fares and cargo charges to compensate for the increase in the cost of petrol. Failure to do this will spell disaster for many companies in the sector, a spokesman said yesterday. According to a communique issued by the Federation, a rise in fares and freight charges is essential to guarantee the viability of the companies, as petrol and diesel now cost 12 percent more than at the start of the year. In the opinion of the Federation, “prolonging the current situation of companies which not only have a low profit margin but are also running at a loss, would lead to a crack in the general economy and the destruction of the sector.” As a result, the Federation is calling on the administration and private enterprise to support an increase in transport costs.
Representatives of the Federation had talks with the education ministry yesterday, to seek an increase in the cost of school transport for the 2004-2005 year, but no agreement was reached. A spokesman for the Federation pointed out that school transport fares had always been “an historical problem” as the price of the service in the Balearics is up to 30 percent cheaper than in other parts of the country such as Murcia, Castille La Mancha and Valencia. The request to raise fares in general will be studied tomorrow at a meeting of the National Committee of Road Transport and the Observatory of Costs, which will study the evolution of fares over the past six months. The demand for higher fares and cargo charges comes on the heels of a report from the National Institute of Statistics, which says that the number of people travelling by bus or coach has been dropping throughout Spain. Last month, a strike was narrowly averted in the sector, which would have paralysed the Balearics, as it would have affected the coaches which take tourists to and from the airport as well as the long distance bus service. Unions and management were discussing wages and working conditions, and although a pre-agreement was reached, it was eventually rejected and the unions sacked their negotiators, claiming they had gone against their interests. The management was accused of trying to “divide” the workers.
The Balearic government was asked to intervene, to find a solution, and to bring pressure to bear on management to become more flexible. The management blamed the problems on internal problems of the unions, which the unions themselves had to solve. The last transport strike in the Balearics caused misery for thousands of tourists who were forced to spend hours stranded at the airport.
The director of the studies department of the BBVA bank, José Luis Escrivá, said that the impact of the price of petrol on inflation and growth was relative and will depend on the price of crude oil in the second part of the year. However, he added that the expectations were for a very low rate of inflation, so the impact will be transitory, even though the price of a barrel rises to 40 dollars. However, he did admit that the Spanish economy has a great dependency on petrol and if current prices are maintained, it will have an impact on growth. He added that a slow down in consumption would not hurt Spain.

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