Euphoria in Iberia: Amid the economic gloom in Europe, airline traffic is booming in Spain and Portugal

An aging and shrinking population, perhaps more than anything else, makes it difficult for Europe to achieve healthy economic growth. What’s been present instead are persistent worries about deflation, countries requiring bailouts, a sickly banking sector, a polarizing refugee crisis, the prospect of Britain leaving the European Union, the rise of populist political movements and a 19-nation eurozone economy that’s still smaller today—never mind falling oil prices and a heavy dose of monetary stimulus—than it was before the throes of the global economic crisis in 2008, according to The Economist. Europe, alas, is no place for optimists.

There’s at least one place in Europe, however, to turn for some cheer: the booming airline markets of the Iberian Peninsula. To be clear, Spain and Portugal have plenty of their own economic and political problems, including heavy indebtedness, high joblessness and in Spain’s case political gridlock. And they remain among the poorest countries in western Europe. But whereas Italy, Sweden, the U.K., Germany and especially France all saw airline passenger volumes grow less than 6% in 2015, according to Airports Council International, Spain surpassed 6% growth, and Portugal far surpassed that with an 11% traffic surge. What’s more, by the fourth quarter, growth in Spain and Portugal was accelerating further: up 9% and 12% y/y, respectively. In western Europe, only Ireland is growing faster.

According to AENA, Spain’s airport operator, the country’s airports welcomed 207m passengers last year, still below their 2007 record of 210m but the highest total since then. It now needs less than 2% growth this year to break the 2007 mark, which seems a good bet: An Airline Weekly analysis of Diio Mi data shows scheduled seats to and from Spain this year rising 12% from 2015 levels. That’s about double the pace of growth in France, for example. And Portugal? Scheduled seats there are up 15% this year, following an all-time record 39m passengers handled last year, according to the national airport operator ANA. Lisbon itself saw 11% growth, while Porto’s increase was a whopping 16%—growth in the Azores was much higher still at 26%.

Spain too would have hit all-time traffic highs last year if not for major declines in Madrid during 2012 and 2013, years that, by contrast, produced growth at Barcelona’s main airport, the country’s…

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