Hoteliers shun air fare rises but appreciate situation

The Malta Hotels and Restaurants Association has come out against the three per cent fuel surcharge on air fares, announced by Air Malta, though the association acknowledged that the airline was facing financial pressures due to the worldwide escalation in fuel costs.

Association president Winston Zahra pointed out that the MHRA would obviously not look at any increase in airfares as something positive. "However, we do appreciate the cost pressures being faced by Air Malta and other airlines due to the rise in oil prices," he said.

Mr Zahra was reacting to an Air Malta statement that as a result of the exorbitant increase in jet fuel and crude oil, it had "to adopt the advice of the International Airline Transport Association (IATA) and introduce an increase of three per cent on all published fares to curtail this exceptional increase in operational costs".

The measure will come into effect on July 1. For fares where the three per cent IATA measure does not apply, Air Malta has adopted a flat surcharge of €5 for every sector flown.

Air Malta said that the price of tour operator package holiday programmes would not be increased before November.

The airline said the final four months of the current financial year would see an increase of Lm1.2 million in its fuel costs over the budgeted amount. At the present rate fuel costs for the summer will be up by Lm2.4 million.

The current outlook on fuel prices over the 12 months to March 2005 points to an average cost which is 35 per cent higher than those incurred in the financial year 2002/3.

Air Malta said it would continue to monitor the situation of fuel prices and the behaviour of the industry and would review the surcharges accordingly.

Asked to comment on the impact such an increase would have on tourism, Mr Zahra said this would depend on how competing airlines were reacting to the hike in fuel costs.

"If all other destinations experience similar increases in cost, our competitive position will remain unchanged," he said. "In saying this we have to keep in mind that our position vis-à-vis our competitors is not a healthy one and therefore we may stand to lose more than others when the prices of air transport increase," Mr Zahra added.