New proposal on budget airlines

Tourism Minister Francis Zammit Dimech has presented a detailed memorandum to the Prime Minister proposing a business offer to low-cost airlines in an attempt to bridge the gap between the government's position and their demands.

The memorandum includes several initiatives to try and drive down the costs and hinges on several factors, including seasonality, Dr Zammit Dimech told The Times.

"The offer will be available to all destinations. It's a reasonable offer, even if the initiatives might not necessarily reflect Ryanair's expectations," he said.

The successful Irish carrier wants to start flying to Malta and has been involved in a vociferous tug-of-war with both the government and Malta International Airport to try to secure good rates. In the meantime, discount airline Easyjet is also in negotiations with the authorities, albeit keeping a low profile.

Without giving details, Dr Zammit Dimech said he believed the formula being proposed to the Prime Minister could provide the right balance between budget airlines and the traditional carriers.

"It would be silly for us to adopt a strategy where the low-cost airlines come in and the scheduled carriers go out. This would mean that we'd lose all accessibility to the major airports and that our tour operators would wind down completely.

There would also be repercussions for Air Malta and therefore we're really walking a tightrope," the minister said.

Dr Zammit Dimech added that Easyjet was being far more reasonable than Ryanair, even if the former was requesting the inclusion of a UK route, which is Air Malta's strongest.

The minister said that no formal applications had been received from foreign airlines to fly between Malta and the airports of Geneva and Basle in Switzerland, Girona in Spain and Porto in Portugal. MIA had earmarked these four destinations as appropriate points from which to increase the number of tourists to Malta in return for an offer of attractive airport fees and charges.

Asked whether Ryanair was justified in claiming that MIA's rates were among the most expensive in Europe, Dr Zammit Dimech replied:

"It depends which figures you believe, as MIA insist it's not the case."

Contacted yesterday, Bernard Berger, Ryanair's head of the flights development department, admitted the Irish airline was sceptical about receiving a decent proposal from the government though he insisted "we are not going to close the door on Malta".

"Yes, of course we're still interested in Malta but it's all subject to the costs of operating there," he said.

He said the government had so far offered nothing concrete to bridge the gap, even though Malta needed to entice low-cost airlines to stem the decline in arrivals.

Ryanair has said it would be able to fly two million passengers to the island within four years and base six aircraft here in return for a long-term, low-cost deal which the airline claims would "save" Malta's tourism. The airline is so optimistic of the success of the Malta route it is prepared to reimburse any concessions granted if it fails to deliver the number of passengers it is promising.

Last Monday, Ryanair lived up to its name as the world's most profitable airline when it announced record first-half profits while unveiling its ambitions to double its passengers by 2012.

"The results show our excellent cost control, despite soaring fuel prices. Ryanair is definitely the best placed airline to continue expanding," Mr Berger said.