PRIVATIZATION OF TAP – RISKS AND OPPORTUNITIES FOR CAPE VERDE

Portugal before the end of this year should privatize, besides other public sector companies , also the TAP.

The obligation of privatization enters in the plans signed yesterday in Brussels between representatives of the Portuguese Government resigned and representatives of the European Union, delegates to assess the extraordinary financing lease of 78 billion of euro, which are needed to Lisbon to balance the public budget and to ensure the continuity as a member of the European Community.

The TAP which has its headquarters in the Centre of Lisbon Airport, travels to 75 destinations in 33 countries worldwide and has a fleet of 53 Airbus of aircraft production.

Among main destinations connects with scheduled flights from Cape Verde and therefore its privatization could produce important consequences  to the communications system of the archipelago of Cape Verde. 

The following four possible musings about what could happen: 

1. The privatization of TAP would also accelerate the privatization process of TACV. Currently the Government at Praia  has not yet clarified and outlined the timing and form of this operation which was announced during the recent election campaign, but due to the conditions set yesterday in Brussels for the granting of the bridging loan to Portugal, now the games should come out. The TACV, after the privatization of TAP would fail to be competitive in prices and quality of services offered by a private European company managed by privates and organized according to the rules of the "free market". Hence the need to prevent a safe default through the operation of the capeverdian company's privatization.
   
   
2. With the privatization of TAP would terminate the "privileges" reserved to the Portuguese company for air communications with Cape Verde (valid agreements since 1975, following the end of the Portuguese colonization), starting a healthy and joint competitiveness between all operators in the sector of air navigation, which could lead, as a result, the initiation of low-cost links, particularly with Europe
   
   
3. TAP unlike TACV, is part of a major global alliances (Star Alliance) which has as its objective the facilitation of air links between companies from different countries and, once privatized will definitely optimize even better code sharing processes, and everything else associated with development intended to increase the number of links and passengers transported. An improvement of the quality of these processes could push Portuguese company to produce its own and independent low cost airline to be allocated primarily to links with tourist destinations like Cape Verde, the Canary Islands, Red Sea and the Caribbean
   
   
4. Among the main big aviation that have already expressed interest in buying the Portuguese company is TAM (also belonging to the Star Alliance network), the Brazilian airline communications giant. If things should go in this direction it is legitimate to assume that Cape Verde will be competitive, whether in terms of cost and quality of handing in support services, and also for the fact of being about halfway between Europe and the South American continent could benefit from considerable economic and strategic advantages
   

The TACV  face scenarios that arise with the privatization of TAP and must necessarily be "reorganized" .

Now the Government, which on the one hand stands the right problem of the possible repercussions in terms of the layoffs of some employees, layoffs are inevitable to give the course a serious process of "restructuring" of the airline company (there are over 800 employees of TACV) must necessarily take on heavy responsibilities.

The times imposed by Brussels, to the privatization of TAP are categorical: no later than 2011.


Renato Evarchi