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The famous remark amongst other jibes by Michael was that passengers would rather pay a lower price than be fooled into paying a legacy airline service at an exorbitant fare
Dr Sapiano a young lawyer and leading consultant turned TV presenter and a prospective Nationalist party candidate has brazenly presented an interesting TV show giving an insight on low cost airlines.
All this happened this week at a heated discussion on DOKSA a talk show hosted on Net TV. As part of his investigative zest Dr Sapiano flew to Dublin and interviewed Michael Crawley the CEO of Ryanair.
The famous remark amongst other jibes by Michael was that passengers would rather pay a lower price than be fooled into paying a legacy airline service at an exorbitant fare ostensibly offering ‘plastic meals’. So Air Malta and others beware, you have now been warned by the bogey man that the game is up and you need to revisit your business model. Again, a barrage of words were hurled at the MIA and its pricing policy, by the guests on DOKSA.
Micheal was reported to have remarked negatively about MIA’s monopoly at the airport, whose objectives have significantly diverged and are in fact in direct conflict with the objectives of tourism development in Malta. He explained that the average rates charged to Ryanair across Europe stand at €7 while MIA charges €24. Despite the MIA’s denial that its charges are inflated, Ryanair retaliated that MIA is among the most profitable in Europe, despite being “far from best practice” in terms of its efficiency. What has not been revealed on DOKSA is that both exponents are right in their assertions. Ryaniar only uses secondary airports where it operates cheaply in Europe and this cannot be done in Malta with one airport.
Can the solution be some clever investment plan to upgrade the ex-Luqa airport to a fully-fledged secondary airport?
The thorny question is whether MIA accepts that there will be two competing airports in Malta given that it was assured a monopoly in its privatisation talks. In any case the subsidy plan introduced for specific destinations by government seems to be a temporary solution, which appears to be working well. Regrettably discussions with low cost airlines such as Ryaniar and Easyjet took longer than expected while the tourism figures continued to plummet. So far this year we have registered a drop of 50,000 from our original projections and there have been more than 38 hotels which closed their doors recently. But a solution is in sight for next year. This was the hope expressed by Philip Lingard, who had acted as an intermediary during negotiations between Ryanair and the government.
It goes without saying that flights out of Malta are terribly expensive. I quote from personal experience this week PKF is hosting an international conference in Dublin and flight tickets to the city cost more than Lm730 (EUR1,700 ) return for three members of staff and fed on ‘plastic meals’.
This is ridiculous and scares away potential business. How can we attract foreign investment when the cost of a short-stay is starkly prohibitive. We are losing out on the short-stay market which reliable sources estimate constitutes 40 per cent of bed nights in most Mediterranean destinations.
On a positive note we welcome the 373 passengers as the first arrivals last week by two inaugural flights operated by Ryaniar. As can be expected they were given a grand fete at the arrivals lounge. This was bedecked as a small village festa, complete with a band and red-clad dancers. Finally the tourism minister has cracked the code and rather than MTA spend millions on dubious advertising and MHRA studies we are wisely putting our money where our mouth is. It is important for such a small economy like ours to maximise its potential as a tourist destination of quality. We had spruced up the islands last year in anticipation of the CHOGM conference where over Lm2.5 million was splashed out to entertain foreign dignitaries and regents. This had certainly put us high on the hospitality map and ought to be commended. Should we keep up with this momentum cries out Mr Zammit Tabona the outgoing president of MHRA? Definitely yes.
There are more than enough human resources employed within the state to keep the islands spruced up and clean but we regularly fail to do so. Keeping this tiny rock tidy and clean should not break the camel’s back, neither fuel up more deficits. Yet if we wish to compete with other tourist destinations in the Mediterranean such as Corfu, Tunisia, Morocco, Majorca and others we cannot linger in our duty to pull our socks up.
The positive note to reflect is that air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalisation taking place.
Travel for both business and leisure purposes grew strongly worldwide so why are we missing the bus. It has been a phenomenon in the aftermath of September 11 that travel rebounded. It is encouraging to note that globally last year airlines carried 1.5 billion passengers.
A lot of this increase in business can be attributed to better and larger aircraft. The availability of large aircraft such as the Boeing 747 and later on the Airbus A380 makes it convenient and affordable for people to travel further to new and exotic destinations.
In Malta since the early sixties successive Governments realised the benefits of tourism to replace the dependence on Colonial spending and spurred the development of resorts and infrastructure by heavily subsidising prime sites to developers to construct hotels and lidos. Examples abound and we recall how in the early sixties the Golden Sands, Hilton, Dragonara, Sheraton, Marfa Bay and Paradise Bay Hotels had been built to lure tourists from the prosperous countries in Western Europe. Over the years some properties changed hands but owners still benefited from the low terms of tenure and naturally pocketed vast speculative gains following the growth of arrivals. As expected, high risks were taken by pioneers in the start-up years when tourists then totalled under 100,000 and were mainly returned British soldiers, their families and friends.
Reverting back to the subject of legacy airlines’ viability this was admirably tackled on the DOKSA programme. Vince Farrugia of GRTU asked for the facts regarding the viability of Air Malta as revealed by the published accounts. Can taxpayers afford to endlessly subsidise its losses out of hard earned taxes. Regrettably, last year saw the number of passengers using the airport decline from 2.83 million to 2.76 million and a drop in travel by local residents, which was caused by the doubling of government surcharge on out bound air travel. Airmalta’s finances are out on a limb because of losses associated with the eight Avro Liners, a pet idea which was launched with so much fanfare by the Air Malta chairman of the day in the mid nineties. This experiment is rumoured to have contributed Lm60 million in total operational and capital acquisition costs. Gone are the days when its political appointees acting as board members and staff enjoyed freebies such as unlimited world-wide travel.
To exacerbate matters the airline is known to carry surplus workers. Suffice to say that while Ryaniar carries 11,000 passengers to each employee, the ratio for Air Malta is ten times higher. A lot of restructuring is ongoing and early retirement schemes are being offered to eligible staff. All this helps to turn the airline into a sustainable venture. To meet the requirements of increasingly discerning customers, Air Malta is now investing heavily in the quality of service that it offers, both on the ground and in the air. Pundits may well ask if its future can be brighter should it be converted into a low-cost operation?
The other alternative is to privatise it partially as was done with Mid Med Bank. Surely if Dr Austin Gatt the Investment minister can attract an investor who can acquire the airline, develop the cargo section into a secondary airport and work the rags to riches miracle that HSBC has performed with its acquisition of Mid Med. Then so be it.
With this prognosis in mind citizens can lift their hopes up to aspire to join the rest of the Europeans who are enjoying cheap travel not to mention the possibility of flying for free. |
