The Malta Hotels and Restaurants Association (MHRA) in a statement today emphasised that “air connectivity is critical for the socio-economic growth of any island irrespective of size.
“This was the reason why Airmalta was set up 40 years ago, and why it is critical for our tourism industry and the economy as whole that our national airline keeps flying.”
The Association said that “when Airmalta was established in 1974, the aviation market conditions in Europe were different to what they are today. Back then commercial airlines were regulated by bilateral agreements which gave monopoly powers to Government owned airlines. Fares were set once a year by adding costs plus mark up and dividing with the anticipated number of passengers on the route. Whether one booked one airline or the other, the fares were the same and if an airline did not register a profit, public finances would make up for the variances.”
It added, “with the advent of the European Union the freedom of the skies became a reality for Europe. This meant that any airline registered within an EU jurisdiction could fly to anywhere within the member states. Consequently the monopoly situation disappeared and the national airlines, which now have become known as the legacy airlines, were caught up with too many staff on the books, inefficient work practices established during the monopoly era and management that refused to read the writing on the wall.”
“In the process legacy airlines went bankrupt or had to be sold out and privatised completely,” MHRA said. “For some time there was also pressure on Governments to work against the new airline entrants, the so called low cost airlines, simply to protect the inefficient stuctures of the national airlines.”
The Association stated, “Malta too tried to stop the low cost airlines coming in and it nearly ran the tourism industry into the ground. MHRA was there to change this direction and as common sense prevailed we have seen arrivals increasing every year.”
MHRA President Paul Bugeja states that “MHRA has called for change in Airmalta for several years but only when the airline was on the brink of bankruptcy, needing state aid and forced on us by the EU, that concrete action was taken. By this time matters got complicated and results achieved have been too little, too late and very expensive.”
Mr Bugeja, further states that “MHRA works closely with Airmalta and the key stakeholders including the Ministry for Tourism, MIA and MTA to face all challenges within the various markets and continuously secure a better future for our national airline. But it is clear that the market conditions for Airmalta have now changed drastically, so it is equally critical to adapt to change and also change the Airmalta business model as necessary. No one disputes Air Malta’s indispensability to the tourism industry and indeed the economy, but this calls for the implementation of specific measures.”
MHRA said that it is of the opinion that “Airmalta should remain fully Maltese owned, however the private sector must be brought in to run the airline with the Government maintaining a strategic interest.”
“It is for this reason that MHRA believes that a new business model should be considered. The BOV model is one that can be emulated for Airmalta, whereby the absolute majority of its shareholding will be floated to the Maltese general public and the Government retaining a strategic substantial share. In the meantime, global and/or regional strategic marketing alliances must be strengthened to develop more effective processes and expand into new markets,” the Association said.
MHRA added that it is confident that “Government recognises the challenges that Airmalta is currently facing and the impact of its future on the tourism industry and the economy as a whole. In the new market realities and despite the best of intentions and the progress it registered to date, Airmalta has still not managed to overcome the challenge of profit generation. Accordingly MHRA stresses that this is the right moment for Government to bring along the necessary changes.”
“Over time a lot has been said about Air Malta needing to operate on commercial lines, and many agree about this. However this process should not over-ride the significance of retaining the airline’s market share which currently stands close to 50%. “
“Government and all stakeholders need to consider all avenues to support Airmalta to continue flying to and from routes which are critical to our country, so it can maintain its market share. This should remain an overriding objective of the airline,” MHRA concluded.