Air Malta braces itself for insurance, fuel hikes

By Kurt Sansone

The fragile airline industry worldwide is already reeling from last week’s tragic events in the US, and Malta’s national airline does not expect to be spared the repercussions of such a massive blow to the global economy.

Air Malta chairman, Louis Grech, told The Malta Financial and Business Times that the acts of terrorism and the fallout from the atrocities will have an almost immediate negative impact on the airline’s fuel and insurance costs.

"This tragedy has far-reaching political, economic and social consequences, which make it completely different from other air tragedies witnessed in the past," he warned.

He stressed that in the next few days, Air Malta will be expecting a "Draconian increase in insurance premiums, which may eventually cost the company millions of dollars".

Mr Grech also pointed out that Air Malta has already experienced group cancellations as a result of the tragedy – a trend mirrored in travel agents around the island.

"Although the situation is not too bleak, the cancellations are a sign of the pending problems," he said.

The Air Malta chairman explained that if fewer people travel, airlines will face capacity problems and profit margins will go down.

"We have to see whether the repercussions of last week’s events are going to be short-term or else a long drawn-out affair," he said.

Airlines all over the world have embarked on massive layoffs to stave off the difficulties the industry was already facing and which have been made worse by last week’s tragic events. The US government is also planning a massive bailout for US airlines hit hard by the negative impact on the industry.

When asked what measures Air Malta was taking to contain the damage, Mr Grech answered immediately that the airline was not contemplating layoffs.

"We are not only monitoring the situation but also taking action to contain the possible damage," he said. "Cutbacks are not on our agenda, however we are rationalising routes and trimming capacity according to the demand. We are also collaborating with the Malta Tourism Authority to establish the best markets and routes to tap."

Mr Grech added that Air Malta was trying to turn the negative slump in the industry into an opportunity.

"We are currently working to tap the aircraft maintenance market, which is a new concept for Air Malta," he said.