Study highlights costs to Gozo of ferry fare hikes

A ferry ticket price hike of just 20 per cent would cost the Gozitan economy Lm1.7 million per year while only increasing profits for Gozo Channel by Lm270,000, according to a study commissioned by the Gozo Business Chamber and the Gozo Tourist Association.

The impact assessment study, carried out by Deloitte and Touche, also projects that a 45 per cent ticket price rise would translate into a Lm3.9 million loss for the tiny island's economy while yielding Lm388,000 for the government-owned ferry company.

The Gozo chamber's outgoing president, John Magro, yesterday told The Times he was not in favour of any price increases and believed the government should continue to subsidise the company "at least to the level we have become accustomed to".

He said the government should continue to invest Lm2.5 million a year in the company. "However, if this does not happen, for some reason or other, it should think very carefully before raising prices. Gozo's economy is already crippled and we must not do anything to put it in recession." He also appealed for consultation with constituted bodies: "The government has to be very careful about where to hit and there is a need for a process of constructive dialogue. History has shown that the situation has only got worse where there has been interference without consultation and decisions cannot just be based on a calculator.

"In 1997, standard foot passenger fares were raised by 75 per cent, car tickets by 28 per cent and the subsidised Gozitan rate by 67 per cent. Yet, revenue for Gozo Channel only went up by 29 per cent and the effects on Gozo were disastrous."

Mr Magro not only believes that the government is right to try and make Gozo Channel a more viable company but he insists that the Gozitans' future depends on this being the case. However, he said the role of the Gozo's constituted bodies was to assess the effects of any changes on the island's economy and advise the decision makers accordingly.

The study will be discussed between the Gozo chamber and GTA before copies are sent to the prime minister, members of Cabinet and Gozo Channel.

Mr Magro said the pricing structure at Gozo Channel must have a social dimension for the Gozitans. "It is fundamental," he maintains. However, he cautions that the Maltese, in particular, must not be put off visiting Gozo.

"The Maltese and foreign tourists leave behind Lm35 million per year. That is about half the income of Gozo's economy. The Maltese leave behind the most money in Gozo and, at the same time, this sector is the most volatile - so we cannot attack him."

He said that the Maltese already had the temptation to travel to other destinations and their options would increase further once liberalisation took full effect in 2005, especially with the arrival of low cost airlines. "This will put even more pressure on the price of a holiday in Gozo."

Mr Magro said Gozo Channel needed to be more creative in its efforts to become profitable. "For example, the Sa Maison route is currently a loss-making operation for Gozo Channel. However, cancelling this service would inevitably lead to an increase in the transportation of goods by 35 per cent as well as increasing the number of heavy vehicles using Malta's newly-built roads which have cost the country Lm100million."

"They can market the idea of sightseeing tours much better now that they are using luxury ferries for this service and make money that way. It is an untapped resource."

He also believes there is room to have peak and off peak rates if this is done in a way that does not put off the Maltese traveller.

"Let's be creative and pro-market," Mr Magro said.