INTERVIEW | Wednesday, 19 September 2007
Low-cost airlines have been vital for the recovery of the ailing Maltese tourism industry in the past year, but Malta should not depend on a handful of these airlines, Malta Hotels and Restaurants Association (MHRA) President Josef Formosa-Gauci tells Charlot Zahra
You were quoted as saying that it would be “suicide” for the tourism industry if the Government did not give Ryanair the Bologna route, which Meridiana has just dropped. Why? Can you explain further?
 Ryanair are currently in negotiations with Government on the Bologna route. We understand that a short haul route was always part of the discussions on the new routes for this winter. We are afraid that if an agreement is not reached, the other routes already announced may be put in jeopardy. If this were to happen, and the new routes do not all materialise this would be a major blow to the industry at a time when it is experiencing a long awaited turn around. We need to continue to build on what we have achieved, not reverse the trend. I believe that a solution to this issue is going to be announced imminently.
What, in your view, is holding back an agreement between the Government and Ryanair over the Bologna route?
Government is rightly seeing the concerns of Air Malta. We have no problem with that but ultimately, after hearing the arguments, Government needs to decide in the best interest of the industry. I do not blame Air Malta for putting up a strong case as it is natural for all to put up their strongest case. MTA too has done its reports on the matter and reached its conclusions.
Are you concerned that Ryanair is already threatening to stop winter routes if it doesn’t get Bologna? Isn’t this a sign of the hold Ryanair can have on the tourism industry if we solely depend on low cost?
Ryanair are definitely not an easy company to negotiate with. In this case however I understand a short haul route was always part of the discussions and so it is nothing new. They originally requested Trapani but this was refused by the Government.
In our view every effort should be made to reach agreements with other low cost carriers so as to reduce the influence of one particular airline. I understand that MTA are currently trying to do just that.
What has been the impact of low-cost airlines on overall tourism figures for Malta since their introduction a year ago? Which markets and sectors have seen most growth since the introduction of low-cost airlines?
I think low cost carriers have had a very significant impact on our arrival figures. There has been the direct impact through the passengers flying on Ryanair, German Wings and Click Air. There has also been the indirect effect which can be seen from the fact that other airlines have revised their strategies and pricing. The greatly improved figures are no coincidence. They are the results of the increased marketing funds and the added seat capacity.
In your view, does Malta need more low-cost airlines operating from here or not? Why? From which markets? Isn’t MHRA concerned about the impact that low-cost airlines have on Air Malta, the national airline?
Low cost travel is a phenomenon across Europe that is here to stay. Over 50 per cent of UK air holiday traffic is on low cost carriers. For our industry to thrive we must be part of it. The more low cost airlines that travel to Malta the better as in that way we will not be too dependant on any one particular airline. We must serve new and underserved routes, and must also look at increasing the number of UK routes from the current one.
MHRA has always stated that Air Malta had, and continues to have, a vital role in the performance of the tourism industry. Air Malta however needs to continue with its restructuring process in order to be in a position to face the new realities of the market. We believe that a restructured Air Malta can compete and exist side by side with the low cost carriers. We are not defeatist and do not think that Air Malta will not survive because of low cost airlines. Just like the airline met other challenges in the past I am sure it will do the same this time round.
The latest figures published by the MHRA survey show in the second quarter, tourism arrivals have grown by 6.4 per cent in the first six months of the year, reaching 502,000. Can you elaborate further? What is your reaction to these results?
At the start of the year MHRA had said that we need to see substantial growth in arrivals to Malta. This has to be done to make up for the losses in the past, and to counter the decreasing length of stay. The survey showed that the arrivals in the second quarter were the highest in 5 years. MHRA is very satisfied that the figures have been increasing and continued to increase at a higher rate in the summer months. These figures clearly show that the combined efforts of Government, MTA and the private sector are having the desired results. The direction the industry is now going in is the right one. We must not be complacent but we must double our efforts to ensure that we achieve the results this industry deserves.
Which were the markets and sectors in which there was most growth during this period? Can you elaborate further?
This year we have seen growth in most of our markets. Some markets like for example Ireland have seen substantial growth. The situation in France is of concern since here we have been experiencing declines. This is a market that MTA are looking at, and which with a concerted effort can be revived.
Do you expect to maintain this momentum for the rest of the year? What are the forecasts for the shoulder period? Which are the markets and sectors that are expected to grow, and which are expected to decline?
Our forecast is that the growth we have been experiencing should continue in October and November. Our internal surveys are showing this and we are very encouraged by the trends. For the winter months the current position is that there is an increase of around 10 per cent in seat capacity. If we continue with our marketing efforts as MTA has successfully done this year, then we should see this seat capacity taken up and our results continue to improve.
For example, the introduction of flights to Girona and Valencia in winter should result in new business which complements nicely with our existing business.
Is the target of 1.6 million tourists set out by the Labour Party in its policy document on tourism an attainable target or not? Why?
As expected and predicted the average length of stay of tourists to our islands is decreasing. It is therefore vital that the number of visitors increases. We definitely need to strive to approach figures of 1.6 million tourists. By ensuring that the seat capacity is available and by marketing our country in the lean and shoulder months, this can be achieved.
What, in your view, are the main problems that tourists face in Malta during their stay? How is the MHRA addressing these problems with the authorities?
Once the tourists are here, it is the product side that one must look at. We have always said that the state of the product is one of the three fundamental foundations of the industry. Product includes both the actual physical product as well as the service received. Everyone that in one way or another comes into contact with tourists is part of the product.
The state of the physical product has improved dramatically but this is an area where there is always more to be done. The current push by Government and Opposition to come forward with new projects is very welcome. We look forward to their implementation as we look forward to the projects being funded by the EU funds. Our appeal is to carry out the work in the shortest time frame possible, with the least inconvenience to the general public and tourists alike.
The MHRA supports the construction of a golf course, at the expense of Malta’s environment and resource (water and land). Why does it feel this is important for Malta when the island cannot compare with the number of golf courses other countries like Spain and Sicily have?
MHRA maintains that there needs to be a balance between the environment and sustainable development. We believe that a further golf course in Malta and another in Gozo will enhance our tourist offer. This winter Malta will be losing out on business in this area precisely because the one golf course we have cannot cope with the demand.
Does the MHRA support the construction of further hotels or is the existing bed-stock sufficient to cover all tourist arrivals in the next few years? Why? Which are those accommodation types that require more bed-stock? Which are those accommodation types that are sufficiently covered by existing bed-stock?
MHRA policy has been that there should not be new hotels on virgin land. The current bed stock should be upgraded and extended. This is one way of obtaining a balance between development and environmental issues.
One area we need to develop further is student accommodation. Student travel is an important niche for the industry but we need to have the right accommodation for this market.
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