Minister denies trying to protect Air Malta

Investments Minister Austin Gatt yesterday made it clear that the government's policy towards low-cost airlines did not stem from the desire to protect the national airline but that the government would not give "subsidies" unless it was in the national interest to do so.

A government core group recently agreed to forge ahead with a strategy that will pave the way for the introduction of low-cost airlines to Malta. Under the strategy, preferential landing rates would be offered to all airlines on those routes where the government would like to see further growth, such as to the Iberian Peninsula and Scandinavia.

Speaking at the opening of the Amitex travel fair at the Trade Fairs Grounds in Naxxar yesterday, Dr Gatt stressed that Malta's was an open economy and nothing could stop a company from setting up a flying operation and charging the prices that its competitiveness allowed it to.

Low-cost airlines did not ask the government for the right to fly to Malta because as EU airlines, they already had that right, he said.

"What they did ask, however, is that the government and private operators, such as MIA, 'discount' various charges which all other airlines are today paying. The low-cost airlines want subsidies in order to operate to Malta.

"The suspicion that the government is reluctant to make it easier for low-cost operators to fly to Malta in order to continue to protect Air Malta behind a bureaucratic fence of inefficiency, is groundless. Air Malta has its concerns about its future but it simply has to live with them.

"But, for the government to spend public money to support a private enterprise, there have to be clear over-riding reasons to do so that are in the national interest, rather than simply in the interest of that commercial undertaking or of any of its competitors," Dr Gatt said.

The national interest in such a consideration was governed by the desirability of attracting larger numbers of tourists, preferably from new markets where Malta had not yet proven so successful in years past, and in the winter and shoulder months if possible, he said.

"This is what the low cost airlines are supposed to be offering - in the papers it was stated that they were projecting carrying one million tourists! What that paper did not explain was that the one million was actually 500,000 tourists multiplied by two, since they would be carrying them in, and then carrying the same people out. What was also not said was that the airlines were not necessarily referring to "new" tourists. They do not exclude that all or some will shift from one airline to another, with no additional gain to Malta."

He added that there were little benefits to the country if the government allowed this to happen.

"It would be simplistic to consider this fact as relevant merely to Air Malta. Other major airlines who now fly to Malta, and who broaden our frequency rates and air communication with the rest of the world, might also be affected negatively to the point of making their Malta operation unsustainable.

"If this is what the 'new market' demands, so be it, but if that happens thanks to government intervention, the matter is altogether different. In this scenario even the outgoing Maltese traveller loses out, as he ends up with less destinations he can go to."

However, there were undoubtedly huge benefits that could be reaped if the right balance is found, Dr Gatt said. The principle guiding the government's decision, therefore, was to encourage new or historically under-performing routes and if need be off-load some of the current costs, "which are within our control for all airlines".

"For the tourism business specifically and the economy generally, the continued sustainability of Malta's national airline is also of not little importance. No one in Malta benefits if Air Malta cannot compete or is driven out of business," he stressed.