EDITORIAL | Wednesday, 22 August 2007

Nonsense on stilts

The electoral promise being made by the opposition leader to slash by fifty percent the surcharge on water and electricity is nonsense on stilts. It is absurd for many a reason. It defies an appreciation that the increase was not the result of government capriciousness but fall-out of the increase in the price of oil on the world markets. It also begs the question where the twenty five million losses to government revenues are going to be recouped from? Tampering with the reduction of the deficit would be foolish especially now that the deficit reduction finally appears to be under control and has paved the way for our entry into the euro zone. It is clear that the surcharge if and once reduced will be replaced by the introduction either of new taxes or the increase in taxation of the present taxes. Either way this promised reduction should be viewed for what it is, an electoral gimmick. It is time to stop hoodwinking the electorate. This newspaper will be costing all promises, including this one on the surcharge, made by all political parties on the run up to the election.
This promise as rightly pointed out by the green party is also irresponsible, as it will foster the belief that electricity and water consumption are cheap commodities. Dr Sant knows only too well that this is not the case since the hike in the price of oil has in the last three years already cost the public exchequer the sum of fifty million Maltese liri, a sum which could well have been invested in reducing the deficit further and earlier.
The hike risked putting all the fundamentals of the economy in dire straits. This was averted. The serious situation calls for an immediate and long overdue government awareness campaign encouraging citizens to consume less and save more. A system needs to be introduced and fast that rewards the more energy efficient sensibilizing them to the advantages of saving energy. Simultaneously, an effort must be made to embarking on a renewable energy campaign, which highlights how over a period of time the country can reduce its dependence on fossil fuels. A campaign to encouraging and incentivising the use of solar energy must be embarked on in earnest. This should be an integral part of the forthcoming budget whereby all households can be made aware of the advantages. This is not sufficient unless backed up by tangible and concrete incentives, which lead households to introduce solar energy in their home environment. The country has been speaking about such incentives for years with next to nothing being done. It is clear that we can no longer afford to miss this bus. The savings to both the country and the average household will be tremendous.
Dr Sant should think this promise through. It makes no economic sense. This is a hot potato, which will haunt him once and if he were to be elected.

Exploiting the edge

The news that Ryan air left one hundred and eighty fuming Italians following the cancellation of their flight to Pisa raises a number of observations. While fully cognisant that technical reasons may well lead to cancellations, it is interesting to note that Ryan air did not have a back up aircraft to service their clients. This shows a deficiency on the part of Ryan air as opposed to the air Malta operation that in such circumstances could offer immediate alternative flights either on its own planes or on any other schedule airline. Air Malta has an edge,in such situations. Understandably it will exploit it in its marketing campaigns. Having said this, its advantages pale when compared to low cost operations essentially because its operational costs are far from low and its survival depends on its capacity to trim ruthlessly its costs, an inevitable process once the election passes. It needs to look at the Alitalia sorry experience, which as a result of high operational costs and endemic political interference is finding insurmountable difficulties to being privatised. Ryan air is on record as saying that it would not bid for Alitalia even if it were on sale for one euro!
It is heartening to note that there were one hundred and eighty Italians on board. This belies the previous belief in certain Air Malta and government circles that the introduction of low cost would simply be a way of subsidising Maltese travellers to Pisa. The numerous amounts of Italians prove the success of the low cost carriers. Our tourist numbers bed nights hotels and ancillary services are experiencing the best summer in six years. This is not coincidental but also due to the introduction of low cost, which should be further encouraged to increase routes to Malta. This is our lifeline especially now that the direct Internet bookings are replacing the traditional tour operator.
The country needs more low cost and a leaner Air Malta. This winning formula will bring more tourists to our shores and stop the haemorrhage of Air Malta, which is a strain on public finances. The one does not exclude the other.