Grab the Ryanair guarantee while we can!

Are we alone in thinking that the guarantee that Ryanair COO Michael Cawley has offered to Malta sounds too good to be true?

Six aircraft based in Malta, up to 26 routes served daily, two million passengers annually guaranteed and the prospect of average (not lowest) air fares of Lm17? That is, of course, before Government taxes of Lm20 more than double the price!

Mr Cawley cited the example of Latvia where he has signed a similar guaranteed deal. There he has already flown over 600,000 passengers in under a year knowing that if his own marketing promotion campaign for Riga fails to deliver the passengers he faces a double hit of repaying the landing charges discount as well as flying empty aircraft.

Just as Aer Lingus is now the most profitable flag carrier in Europe in the face of Ryanair competition on its home patch in Dublin, the Latvian carrier Air Baltic has enjoyed a renaissance since Ryanair arrived.

As the discount for volume deal has to apply to all carriers under European Union law, Air Baltic immediately qualified for the best discount at Riga airport as the home carrier with all its existing traffic. Backed by this cost advantage, Air Baltic has expanded its route network and opened a second base at neighbouring Vilnius in the same way as Air Malta is looking to expand its operations in Catania.

Air Malta should be cheering Ryanair on from the wings if it is evaluating developments across Europe, as the Ryanair formula would give it an immediate advantage at MIA. Air Malta will receive a crucial cost-saving in its fees at MIA which its real competition - British Airways, Lufthansa and Alitalia - will not because they don't have the same volumes into Malta.

For all Mr Cawley's calm demeanour, only a fool would not recognise that the Ryanair model of doing business is under constant pressure. Mr Cawley confidently talked about managing his business with oil prices at $70 a barrel but there are other threats in the low-cost airline sky with proposed European taxes on air travel and the UK Environment Minister contemplating carbon taxes on air travel last week.

Ryanair haven't publicly spoken about deadlines but we are only a politician's decision or a terrorist outrage away from Mr Cawley's business model numbers changing and his offer to Malta would undoubtedly worsen. Malta cannot afford to go slowly and cautiously on this one. If Mr Cawley's guarantee is a negotiating gambit, his bluff should be called and the Minister of Tourism should say a resounding "yes, we will hold you to it" for the good of Malta.

The Prime Minister marked Malta's independence anniversary on the Granaries by saying: "Change is part of the process of life and people should not be afraid of it." Ryanair is the first opportunity for his government to lead by example.