The airline industry

Ryanair wants to start flying to Malta and to bring over a projected one million passengers annually. It beggars belief that the government keeps saying that this has to be done in such a way as to create a minimum impact on Air Malta. How can we publicly admit that we are contemplating some form of protectionism? Is this the spirit of the EU?

During the Yes campaign the government said the EU would provide Air Malta with new opportunities. Is this yet another U-turn? Does the government now see the EU as a threat to Air Malta? Otherwise, why on earth will they not lay out the red carpet for the likes of Ryanair, welcome them with open arms and say, please start operating to Malta straightaway?

The fact of the matter is that Air Malta was a low-cost airline in the 1970s and 1980s. At that time, it was also one of the very few profitable airlines in Europe and the envy of the Association of European Airlines (AEA). This government has saddled it with several financial burdens and turned it into a high-cost airline.

Having saddled everybody with financial burdens and bureaucracy, the government now wants Maltese businesses to compete with their European counterparts. In the long period leading up to EU accession, instead of preparing Maltese businesses like Air Malta for EU membership, the government was busy hiding the true state of the country's finances and competitiveness. Voters were wooed to say "yes" by the opportunities waiting for them in the promised land as conceived and dreamt up by Eddie Fenech Adami. All they had to do was vote "yes" and restructure!

The low-cost airline threat is not exactly new. It started more than 10 years ago. Airlines like Air France, British Airways, Iberia Airlines, KLM and Lufthansa have been battling the low-cost operators and have succeeded in retaining their profitability. When announcing profits of over E200 million for the year 2004, Iberia said "we have been making use of a lot of the techniques of low-cost airlines".

Why did Iberia look to airlines like Ryanair, and why did Air Malta look to Swiss Air (a twice failed airline) for ideas? The answer probably lies in a statement made a couple of years ago by Austin Gatt, the minister responsible for Air Malta, that "low-cost airlines are not scheduled airlines".

What is the difference between Ryanair and Air Malta? Both airlines have modern aircraft, both have trained pilots, engineers, cabin crew and ground staff. Both of them face higher aviation fuel costs and higher insurance costs. Both of them face the ups and downs of the airline industry and world economy. Both of them are in the EU. Both airlines have a limited local market. Both airlines have a timetable. But that's where the similarities end.

Ryanair has a clear-cut business model that they copied from another successful airline. Ryanair does not have a politically appointed chairman and board of directors. It does not change its chairman, chief executive officer and board every five years. It does not retain, employ or promote staff because of the way they vote. Ryanair is run as a money-making machine not as a vote-grabbing machine. It is not forced to follow its government's frivolous ventures into overseas properties and pay 10 times more for office space than it needs to. It is not constrained to making only politically acceptable business decisions.

And Air Malta is expected to compete with the likes of Ryanair and Easyjet!

The government, the primary shareholder of Air Malta, has through its shortsightedness and incompetence taken a money-making machine and turned it into a burden on the taxpayer. The government blindly took Air Malta and several other businesses into an arena of competition that they were ill-prepared for. Now these businesses are stuck up the proverbial creek without a paddle.

What is the solution? The first lesson the government has to learn is that if something is not working, change it.

Secondly, having held Air Malta backward in its development for 17 years, understand that the problems are deep-rooted and the solutions probably beyond the ability of any of the current Cabinet ministers.

Thirdly, do not treat Air Malta like a PBS or a Gozo Channel because the playing fields are slightly different!