TAP Privatisation: Montenegro Demands Bidders Expand Beyond Lisbon Hub

Prime Minister Luis Montenegro has raised the stakes in the privatisation of TAP Air Portugal, telling the three remaining bidders that they must submit plans to bolster the airline's operations and routes at all Portuguese airports -- not just its main Lisbon hub.

The announcement, made on Monday, signals the government's determination to use the sale of the national carrier as a lever for regional economic development, at a moment when communities in Porto, the Algarve, Madeira, and the Azores have long complained about being underserved.

Three European Giants in the Running

The bidders are three of Europe's largest airline groups: IAG (the parent company of British Airways and Iberia), Air France-KLM, and Lufthansa. Each brings a different strategic vision and network, but all three will now need to demonstrate how they would grow TAP's presence beyond Lisbon's Humberto Delgado Airport.

Montenegro's requirement specifically targets operations at Porto's Francisco Sa Carneiro Airport, Faro Airport in the Algarve, and the airports serving Madeira and the Azores. The prime minister framed the condition as non-negotiable, reflecting a political consensus that privatisation cannot come at the cost of regional connectivity.

Why Regional Routes Matter

Portugal's aviation landscape has long been Lisbon-centric. TAP operates the majority of its long-haul flights from the capital, while regional airports rely heavily on low-cost carriers like Ryanair and easyJet for their international connections. Porto, Portugal's second city with a booming tourism sector, has repeatedly called for more direct intercontinental links. The Algarve, dependent on seasonal charter and low-cost traffic, wants year-round connectivity that a flag carrier could provide.

For the autonomous regions of Madeira and the Azores, the issue is even more acute. Island communities depend on reliable air connections to the mainland and to international destinations. Any reduction in TAP's service to the islands would have immediate consequences for residents, businesses, and the tourism industry that forms a pillar of both regional economies.

The Privatisation Timeline

The sale of the government's 44.9 percent stake in TAP is expected to be completed in the second half of 2026. Bernstein analysts valued the stake at approximately 700 million euros in November, representing a roughly 25 to 30 percent premium over European airline peers -- a premium justified, they argued, by TAP's strategic position as a gateway between Europe, Brazil, and Africa.

TAP was nationalised during the COVID-19 pandemic after requiring billions of euros in state aid to survive. The airline has since returned to profitability and undergone significant restructuring, making it an attractive target for the three bidding groups, each of which sees TAP as a potential complement to their existing networks.

What This Means for Expats and Travellers

For the large expatriate and immigrant communities in Portugal, the outcome of the TAP privatisation will directly affect everyday travel. Expats in Porto and the Algarve currently have limited options for direct flights to destinations like Brazil, the United States, and Africa -- routes that TAP serves from Lisbon. If the winning bidder invests in regional expansion, it could mean shorter journeys, lower fares, and less dependence on connecting through the capital.

For those living in Madeira and the Azores, any commitment to maintaining or expanding island routes provides important reassurance. Historical precedent suggests that private airline owners tend to consolidate operations around the most profitable hubs, which is precisely why Montenegro has placed this condition front and centre.

The government has not disclosed a formal deadline for the submission of binding bids, but market observers expect the process to accelerate through the spring, with a preferred bidder identified before the summer.