Flying low

There is nothing to stop low-cost airlines from including Malta in their business plans. There is no justification to lever them by cutting down their costs in any open or disguised preferential manner. That is not equal to saying Air Malta should be protected because it is the national airline. It is to say that Air Malta, and other airlines using Malta, should not be disadvantaged. The Investments Minister made the essence of that argument forcefully at the opening of the Amitex travel fair.

Before a recent government decision to adopt a strategy to introduce low-cost airlines to Malta, low-cost airlines had looked tentatively our way.

An exploratory flight was welcomed on the airport apron with open ministerial arms. There was a strong commercial, careful PR build-up to spin a belief that low-cost airlines would massively expand tourism to Malta. That coincided with warnings that Air Malta had to cut costs to try to level out of a tail-spin into deep financial red.

A cost-slashing exercise was hammered out. Employees took sharp pay cuts. Contradictorily, an expatriate CEO continued to cost Air Malta around Lm200,000 annually. That outlay too could be slashed, come autumn, when the CEO's contract ends. The role can be taken on by the airline's very experienced senior Maltese executive.

Keen costs and efficient quality service are necessary conditions. They are not sufficient. There remain market challenges to meet. Air Malta cannot alter the external situation. It can only be proactive to attempt to compete within it. It would be madness were the government to create or allow domestic handicaps to airlines operating from here, of which the national carrier is only one.

Low-cost airlines have a formula: no frills, extensive direct selling and striking advantageous deals with destination authorities anxious to benefit from their volume. Any such deal which basically diverts custom to the low-cost providers yields zilch to a host country like Malta. Should the island be too expensive it has to address the problem right across the travel spectrum, not by encouraging a new operator to the detriment of those already flying the base.

Airlines and tour operators will target Malta if they see there is demand that can be met profitably. The way to use public money to generate demand is not, as has been done in the past, to funnel money into commercial pockets.

It is a brutal reality that one has to keep commercial interest in focus, since tour operators have a considerable say in routing demand towards destinations that yield most to them.

But above all, public money has to be spent to develop, improve and promote the Maltese Islands as a specific-interest destination. The Malta Tourism Authority has a key role. It cannot fulfil it should it become the tourism minister's toy; if the minister and/or ministry meddle in its operations, directly or through some long arm.

Performing at its best, the MTA would still be able to promote the Malta product only if that is good enough, differentiated from the competition and offered at a price that gives good value. Price depends on the tourist trade's costs, efficiency and profit, converted at a correct exchange rate into the tourism currencies of main relevance to us.

In terms of flying, the fare is not the only consideration. There must be adequate capacity on the routes of interest to Malta. Airlines - low-cost, Air Malta and any other airline - can be only a part of the equation. If the equation becomes too dependant on one airline, whichever that may be or might become, problems lie in store.

As for increasing the number of tourist arrivals, one has to work out the critical mass and relate it to Malta's absorptive capacity for tourists. That cannot be determined primarily by the number of beds, which is added because developers do not subject their plans to real sensitive analysis. If Malta targets an ever rising number of visitors, it will ensure its decline as a serious and sustainable destination.

Congestion on the roads is rising. Improvements to the network will be overtaken by it. Pressure on the infrastructure and the environment will create unsustainability. Fares to fly to Malta have to be competitive. Above all, there has to be a sustainable Malta to fly to.