Request to set up new airline turned down

A leading local tour operator has applied to set up a second Maltese airline, but says his request has been turned down by the authorities.

Mr Robby Borg, a hotel operator and owner of Bargain Holidays, which is well known locally for its cheap prices on the London route, is furious at the decision and has asked European Transport Commissioner Neil Kinnock to intervene with the Maltese government.

When contacted, Transport Minister Censu Galea said that at this stage, before changes are made to civil aviation regulations that would allow the liberalisation of the airline sector in terms of large passenger planes, it was not possible to grant a permit for another airline to be set up.

The sector is set to be liberalised upon Malta's accession to the EU in 2004.

Mr Borg claims his company carries more British passengers to Malta and more Maltese passengers to the UK than any other tour operator.

However, he said he was suffering from a handicap when competing with international tour operators: "I use various airlines to carry my customers and this puts me at a great disadvantage when I compete with other big tour operators, as they all have their own airline".

Mr Borg said that he had officially applied for a licence way back in July of last year: "Since then the government has announced the end of various monopolies and the liberalisation of most sectors. Air Malta is the only entity of its nature to have retained its monopoly and the government has negotiated with the EU so that the sector will only be liberalised upon accession, that is in May 2004".

Mr Borg said he had everything ready to set up the new airline: "I have concluded talks on the lease of a number of A320s from Singapore Airlines, which are at present parked in Cambridge.

"Our intention was to operate four daily flights to the UK in peak time, three flights off-peak and two flights in winter. The plans were to operate daily flights to Gatwick and Manchester as well as to penetrate several other airports in the UK. We intended to operate to eight airports in the UK and to have a full Maltese crew and captains. It is estimated that I would have invested around $25 million on this project in the first years of operation," he said

Mr Borg said that when he realised that the process to set up a Maltese airline was going to take long he made a strong attempt to set up an airline in the UK, named British Air Bargains.

"However I was given legal advice that as a Maltese citizen I would have problems with the UK Civil Aviation Authority, and they would reject the application."

He said that over the past months he had tried hard to speak to top government officials on the issue of granting his company a licence.

"I spoke to Tourism Minister Michael Refalo and explained that I would increase the number of tourists from the British market during my first year of operation by 100,000. He said he was in favour of my project.

"However the issue had to be tackled by Economic Services Minister Josef Bonnici and Transport Minister Censu Galea, who incidentally have never pronounced themselves against the venture," said Mr Borg.

"Prof Bonnici has told me that Air Malta have to be in agreement and lately Mr Galea informed me verbally that Air Malta was against the venture and therefore my request could not be accepted.

"I had offered the government to give Air Malta the engineering and handling services for my airline, to agree on discounts that I would be able to give to my clients, and that until Malta joined the EU I would only operate to the UK."

Mr Borg said he had asked Mr Kinnock to intervene: "I asked him for clarification because we cannot go on like this. The situation is unacceptable. I am very much in favour of EU membership but the government cannot announce that we have successfully concluded negotiations and have been accepted as potential members and at the same time retain this kind of protectionism.

"We cannot continue to face the British tourists and the Maltese population with limited competition and denying them the possibility to fly for less money.

"If the airline were to be registered in Malta it would be beneficial for the country because we would employ Maltese and it would also generate excellent spin-offs for the tourism sector and the economy in general.

"Furthermore, I can guarantee that we will see a substantial increase of British holidaymakers to Malta, especially as we will keep fares low, like Easyjet and Ryanair."

Mr Borg said that every Maltese was aware that since the government has started the liberalisation process in various sectors the effect on the economy and the players involved had been extremely beneficial.

Asked for his comments about the issue, Prof Bonnici said the present environment was not conducive towards the setting up of another airline.

"We've seen airlines go out of business and making huge losses. The authorities would have to take these factors into consideration.

"The market is still not liberalised in Europe and this constrains the operations of Air Malta. There are limits on the number of airports and sites it can operate to.

"When the market is more liberalised it will be a different story. It would be premature to partially liberalise the sector here now."