Low-cost miracle cure?

In his best seller Making it happen - Reflections on leadership, John Harvey-Jones, one of the most successful and admired industrialists in the world, says: "I have grown very tired of the 'in one mighty bound Jack was free' sort of management book: the instant prescription, which if followed will solve every ill from bankruptcy to athlete's foot."

I think we should take this commonsense advice when we consider the impact of low-cost airlines on our country.

While we should take all sensible measures to encourage them to operate to Malta, it would be foolish to think that they will solve all our tourism problems. We still need to take many other steps to revive tourism. We need a national strategic plan. We need a government that reduces the tax burden on our travel and tourism industry to compete successfully globally.

We need to improve and innovate the products and services we offer tourists. We must become cleaner, better organised, have a healthier environment and get our act together and mobilise all our natural, cultural and human resources to convince people that our islands are worth visiting and worth telling others to visit.

These small islands have a millennial history and so many interesting people have passed through here and left their mark, that not even we are aware of, let alone most people in the rest of the world. We need to make ourselves more visible and in a much more effective way on the Internet. We need to market ourselves much better in our different source markets. We need to enter new markets. We need to provide good quality, affordable and welcoming experiences to all those who visit us and make them feel at home.

So low-cost airlines are only one factor in the equation. The question "Low-cost airlines: what future?" can only be answered if we answer the question "Tourism: what future?" Our tourism can only have a future if we provide the positive experiences people want when they come to our islands.

We will have a vibrant tourism industry if we stay relevant and we can only stay relevant and pay attention to the fact that tourists change quicker than destinations and if we do not change with them, they will leave us high and dry. We have got to work hard to stay in touch with how people are changing in our source markets and in the new markets that are emerging worldwide.

Undoubtedly, a new trend that is getting stronger by the day is more and more people expecting to fly cheaply. A survey compiled by the Civil Aviation Authority of the United Kingdom shows that 50 per cent of passengers of low-cost airlines come from the richest 25 per cent of society. Those who use Stansted Airport to take their low-cost flights earn an average salary of £51,000.

One-sixth take a low-cost flight regularly to spend days in their second home in France, Italy and Spain. Money saved on airfares is then spent on other tourism services. Low-cost airlines have created new traveller segments. Wherever they operate they have increased tourists and hotel room rates have improved.

More airlines, although challenged by the high price of oil, know that they have to compete for this lucrative market and are cutting costs and taking steps to follow low-cost business models.

Flying cheap

The Internet and cheaper travel are transferring more power into the hands of individual travellers. Traditional airlines, airports, tour operators and hotels have to adjust, re-invent themselves or, sooner or later, die.

A survey carried out by MORI in our main source market two years ago called "The changing face of travel in Britain" discovered that 52 per cent of those who travelled in the last two years had followed the recommendations of their family, friends and acquaintances when they decided which country to go to. Only 14 per cent followed recommendations by travel agents.

Thirty-two per cent organised their own trips. Another 30 per cent used the services of large operators. The British package holiday industry that for years has competed on price and price alone is on the decline.

The survey concludes that the traditional sun, sea and sand package holiday focused on the Mediterranean appears to be slipping in popularity, to be replaced by more independent arranged travel.

Low-cost travel plays a crucial role in this new scenario. All these changes have massive implications for us in what we offer, how we market ourselves and the access people have to our country once we create the demand for them to visit us. We are talking about the British market and we cannot simply extrapolate to the German, French, Italian, Scandinavian, Spanish and other markets what is happening in the British market.

We have to be in touch with each and every different market we have and address each market appropriately. But similar trends to that noticed in the British market are happening throughout all the European market.

In 2005 on an average day in Europe more than two million passengers and more than 25,000 aircraft took to the sky; 3,500 flights a day, 13 per cent of all flights, were operated by the low-cost airlines. This was 1,000 more flights, or 33 per cent more than the year before. Seventy per cent of all new flights were started by low-cost airlines. By 2010 the share of European traffic by low-cost airlines is set to rise to 36 per cent.

There are now 51 low-cost airlines in Europe. Traditional airlines and the main low-cost airlines are converging towards a middle ground and taking on similar operational characteristics as they work hard to survive and thrive. At present traditional carriers need to fill at least 65 per cent of the seats to make a profit, low-cost carriers need at least 90 per cent occupancy to stay in the black. Ryanair, Easyjet and Air Berlin have to find 75 million new passengers a year just to cover the cost of new planes and that is why they are searching frenetically for new viable areas where to expand.

Low-cost airlines will only come to Malta if their operation here is feasible and financially viable. They cherry pick the most delicious routes. They know very well how to take care of their own interests. We do not need to do that for them. We need to take care of our own interests.

How many low-cost airlines, traditional airlines and tour operators can our market size support? If we take steps to help low-cost airlines operate feasibly to and from Malta, how will this affect the existing traditional airlines and tour operators bringing tourists to Malta?

Can we afford to be ignored by low-cost airlines when we know that there is a close link between Malta's tourism performance and the capacity and ease of air access to Malta, not only for our hotels, restaurants and tourist attractions and facilities but also if we want our cruise passenger business to succeed and develop into a fly and cruise operation?

evaristbartolo@hotmail.com