Illegal vessels may be a concern for some yacht charter fleets in the Spanish market, but for a large number of boats the real pirates, are the regulation authorities themselves. They are crucifying the market by not abiding or maybe by not interpreting European Union regulations in a fashion that allows fair-trading.
TAXATION
The case is best demonstrated by a large motor yacht built this year costing - say 10 million Euros.
Specifically to legalise and obtain a charter license to operate in Spanish waters starts with paying the12% (1.2million Euros) for matriculation. There are numerous other expenses also necessary to comply, but by comparison these are relatively small - for simplicity and to avoid a blush from the Spanish tax man, lets just ignore them, because none of the above costs are incurred elsewhere in the western European basin.
FUEL
To fill the fuel tank may require 50000 litres. Duty free prices available to commercial vessels in France and Italy mean prices of say 30 cents a litre compared with say 80 cents in Spain - a difference of 25,000 Euros. The charter fee per week might be say 100,000 Euros. For commercial yachts France zero rates for VAT on charter fee, fuel and drink - as does Italy and although the latter retains the right to apply at normal rate, it is never charged a difference of 16,000 Euros. Depending on how far and much the client cruises and drinks, the average on average fuel, food, drink and port expenses would be in the range 30 to 50% of the charter fee as an additional cost. So providing the owner bears all the license expense, the broker has to inform his client – Sir, your holiday in Spain rather than Sardinia or Corsica will cost you 22,000 Euros more in tax per week! Imagine how that goes down with an American who, incidentally, cannot fly directly into Palma but he can into Nice and Rome.
BUSINESS TO BE HAD
Since the 9-11 tumble in stocks and shares, charter trade has seen a similar downturn but there is still business to be had. At peak season last year, there were over 40 yachts in excess of 45 metres anchored in one bay in Sardinia - not all chartering to be sure, but two weeks later, still in the height of holidays, there were 2 anchored off the beaches of Ibiza! This effectively means that most trade will not come to the Balearics unless on a Pirate non VAT yacht - and any stiffening of regulations will only cause the Spanish authorities to lose even more income from cash spent ashore by those very people.
FRANCE AND ITALY
The examples given here are not peculiar to large yachts. We have operated a relatively small fully licensed vessel out of Palma for two seasons. Prior to that, all our business was in France and Italy – which is where our central broker is telling us the bulk of trade will be again this season. These brokers are annoyed with Spain as they had to fight long and hard to coerce the French authorities to interpret European law for commercial yachts to be treated on a level sea, along with fishing boats and other traffic. With over 2 million French jobs either directly or indirectly reliant to some degree on yachting, they got the message!
OTHER REASONS
There are other reasons why the Balearics are missing out, particularly for superyachts. For example, if you ignore the one mooring place alongside the fuel quay in Portals, there is not one single attractive berth in the whole of Mallorca for a charter yacht over 40 metres. We have good dormitory marinas, but until places like downtown Palma and the outer control tower quay at Portals can offer places for guests to swan around aft deck gladioli whilst sipping G & T’s prior to a short stroll and spending a fortune in shops and restaurants, the Balearics will continue to miss out on an ever increasing financial summer trade bonanza.