Air routes within the Canaries can be classified into three types:
- Longer routes (> 170km) between Lanzarote and Tenerife/Gran Canaria, Fuerteventura to Gran Canaria and La Palma to Gran Canaria;
- Shorter routes, including Tenerife to Gran Canaria, La Palma to Tenerife and Fuerteventura to Gran Canaria; and
- Non commercial routes which are subject to direct subsidy (known as a Public Service Obligation), including routes from El Hierro and La Gomera. These are not discussed further.
The distinction is important because, in this section, we will benchmark inter-island air fares against routes with a similar distance flown by Ryanair between the Peninsula and the Balearic islands.
In Figure 1 below, we present two inter-island air fares and benchmark these against flights over similar distances operated by Ryanair to Ibiza and Mallorca.
The fares shown in the first half of Figure 1 are low season fares to the Balearic Islands and bookable three months in advance, whilst the second table shows prices at the height of the peak just four weeks in advance.
Lanzarote – Tenerife North (TFN) is a monopoly operated by Binter whereas the route to Las Palmas has competition from a smaller operator, Canary Fly; this explains in part the lower cost per kilometre of the shorter inter-island route.
What is not immediately explainable is the very wide discrepancy in fares at other times of the year, with the Ryanair fares at less than half the level of the cheapest Canarian ones. Even if a bag is paid for with the Ryanair flight, the cost per kilometre is significantly below that of Canarian flights (which include a luggage allowance in the price).
To enable a fair comparison of the flights listed in Figure 1, we also need to consider airport charges. The two charges which are of interest here are the landing fees (based upon an aircraft’s maximum takeoff weight) and fees per departing passenger.
In 2015, these charges were significantly lower for inter-island flights than for domestic routes to and from the Peninsula. For a Boeing 737-800, as operated by Ryanair, and assuming 170 seats occupied, the approximate difference airport charges per passenger was €4 under the 2015 tariff, or 2 cents per kilometre for a 200km trip. Therefore, the anomaly in ticket prices per kilometre is actually higher than Figure 1 suggests.
Below, we can see the fares on the two most popular shorter routes, between Tenerife and La Palma and Gran Canaria (LPA).
Figure 2: Fares on Shorter Routes
This figure provides some support for the monopoly pricing argument in the previous section; please note how the fare per km, in cents, between La Palma and Tenerife is lower for Canary Fly and only slightly higher for Binter, even though the route is twice as long as Lanzarote-Tenerife.
Although Binter has an air monopoly on the Tenerife-Gran Canaria route, air travel between the two largest islands accounts for only one third of total demand. In Figure 3, we compare the ferry fares which, in certain cases, are only slightly below the equivalent air fare.
Figure 3: Ferry Fares Tenerife-Gran Canaria
Inter-island ferry fares are discussed in further detail in the next section.
The chart below provides mid-season return (October 2015) fares for a foot passenger. Any discounts attributable to residents have been excluded from the comparison.
Figure 4: Ferry Fares in Canaries
Note: fares research was undertaken in July 2015
In the chart above, inter-island Canarian fares are shown in red, the yellow points represent other ferry routes in Spain and the blue points are elsewhere in the world (UK, France, Italy, Malta and Australia). The chart provides evidence that, in general, the prices charged by Canarian ferry operators are somewhat higher for similar distances than in other countries.