Should Malta still exist?

How should we attract low-cost airlines to operate to and from Malta without harming existing traditional airlines and tour operators who already bring tourists to Malta and Gozo? One line of argument trying to answer this question goes like this: 72 per cent of the UK market and 87 per cent of our other core markets still use traditional distribution systems. Is it wise to alienate our traditional suppliers in the hope of attracting new ones?

The prudent advice of those who subscribe to this opinion is to keep low-cost airlines out of London and Manchester, where we are well served but try to get them to operate from other regional airports, which are not being served at present. The same people argue that we must also keep low-cost airlines out of the routes that link Malta to France and Germany but work hard to get them to fly routes to Malta from Italy, Spain and Scandinavia because we need to break into these markets.

But is the option of cherry picking the delicious routes on which we want low-cost airlines to operate realistic and available to us? I do not think so. Last summer Malta International Airport tried to attract low-cost airlines from new markets we want to develop in Europe and offered them a package of incentives. No low-cost airline took the package.

So we have to assess other options. Our market is too small. We can make it slightly bigger through much better marketing to increase the number of tourists who want to come to Malta but our market size is always going to remain a major disadvantage for us to be considered a viable operation for many airlines and tour operators. They will squeeze each other out and we must be careful not to take the wrong step and end up being the biggest losers. It is in the small markets that incumbent airlines and tour operators are more likely to reduce capacity and even withdraw in the face of increased competition from low-cost airlines.

Major tour operators and some airlines have already started reducing their capacity and withdrawing from some of the routes to Malta because of reduced demand for Malta. This is a major problem that needs to be addressed seriously. Otherwise all other efforts in tourism are like arranging the deckchairs on the Titanic.

So far at least, we have only one airport. Other countries have secondary airports, which they offer at a discount to low-cost airlines. For example, British Airport Authority (BAA) uses its earnings at Heaththrow to cross-subsidise Stansted. Eric Weinsten of the UK Department of Transport says: "The rapid success of Stansted as a hub for low-cost airlines is in part due to BAA's ability to keep landing charges down by subsidising them with profits from Heathrow."

We must also be ready to be imaginative and within the legal and regulatory constraints of European Union membership create support schemes to encourage more and cheaper air links between Malta and other countries. We must ensure that these schemes are designed in such a way as to be an incentive for traditional airlines, tour operators and low-cost airlines and these schemes should reward operators on the basis of how many people they bring to Malta.

The last subsidy scheme operated by Malta for the British market - known as TOSS - served us very well. More than 100,000 British tourists (33% of all arrivals from Britain) with an additional real revenue of over Lm20 million used to come to Malta thanks to this subsidy scheme. For every lira we spent on the subsidy schemes, Lm10 were generated as additional revenue from UK tourists.

We must find imaginative ways to support all those who want to improve and make more accessible air links to our country and bring people to Malta and Gozo.

Palma de Mallorca is thriving and attracting weekend breakers to its boutique hotels in winter and its cruise passenger business is growing because it has the highest number of low-cost flights in Spain where one fifth of all flight movements are operated by low-cost airlines. Air Berlin, one of the top three low-cost airlines in Europe, uses Palma de Mallorca as the hub for their other Spanish destinations.

Becoming Wimbledon

We should try to negotiate with a major low-cost airline that might be interested in using Malta as a hub for some of its operations and destinations. Easyjet has already set up a company in Malta as it considers our financial services attractive and competitive. Ryanair is also interested in expanding its operations in the Mediterranean to use the new fleet of planes it is acquiring.

As we negotiate sensible agreements with foreign companies, we must address the growing concern that we are turning our small country into an auction where we are selling off our national assets like banks, airport and port. We have gone too deep down the process of what is called the 'Wimbledonisation' of our economy with an attitude of "it doesn't matter if most of the tennis players (in business terms, companies and banks) aren't Maltese any more, as long as they play here".

Raising this concern cannot be dismissed simply as outdated and narrow-minded nationalistic protectionism. We risk losing all say in our affairs. We have rushed fast forward into the past, becoming again a part of somebody else's story. We need foreign direct investment. We need mergers and strategic alliances with global players but we must not allow ourselves to become simply small building blocks for the ambitions and commercial dreams of others. We can only grow if we become more active in the global economy.

The more we open our economy to the rest of the world, the more we should find ways of still remaining small players in our own right and not just small subcontractors for others. So while we do all we sensibly can to develop our air links with the rest of the world, we must do all we can to enable Air Malta to change, survive and thrive in a liberalised aviation industry, not to become totally dependent on traditional and low-cost carriers and tour operators who ultimately always see us a very small segment of their operations and their loyalty is to their bottom line. We need a feasible and viable Air Malta as an indispensable link in the value chain that links our travel and tourism industry together.

The steps that we need to take to rejuvenate our tourism, among them the measures to increase the opportunities for cheaper air travel to Malta, must be taken by bringing all the stakeholders together and as much as possible balancing their interests within the framework of our general interest with the full knowledge that if one link in the value chain is weak or broken, everybody suffers.

evaristbartolo@hotmail.com