Unlike Michael Cawley, Ryanair's chief operating officerof Ryanair, who reacted with amusement to Investment Minister Austin Gatt's comments at the opening of the Amitex fair, I felt less than amused.
Like all my colleagues in the tourism industry, who have invested our lives, not to mention our money, for decades in the sector, we do not fly any flag for any low-cost carriers (LCCs). It is however our clearly stated aim that we will continue to support efforts to float much needed low fare seats to Malta.
It is well known in tourism circles, as I'm sure Dr Gatt is aware too, that we are currently facing an acute shortage of airline seats to this country. The number of seats available from our second largest market, Germany, for this summer is substantially below what we need. It is common knowledge that group business is constantly being lost because of unavailability of seats. Only last week, InterContinental Malta lost two major groups that were re-routing from Sharm Alel Sheikh, following the tragic bombings there, because too few seats were available to Malta and those that were, were at too high a cost. This is a common occurrence. The business has now been lost to Cyprus.
Notwithstanding this argument, the market is constantly changing and today we face the situation that the tour operating business is in steady decline while there is an exponential increase in business directly booked by the public through the internet; the majority of such holidaymakers travel on low-cost carriers. The whole world, with few exceptions, has accepted this new market reality. It appears that Dr Gatt hasn't. Why do we always have to be the last to accept the inevitable?
Malta regrettably does not have a healthy growth track record of late. in tourismIn fact, over the last decade we have seen little or no increase in the number of bed nights spent here, when most of our competitors are flourishing. The world is shrinking largely due to the availability of low-cost fares; neither our visitors nor do we Maltese benefit from this new phenomenon.
Existing airlines offer some limited seats on low cost but this is not sufficient to attract the hundreds of thousands we need to keep the Maltese economy healthy. According to The Guardian newspaper, the British Department of Transport has revealed information stating that over the last 10 years the number of holidaymakers flying to European destinations has risen from 36 million to 65 million annually. Do you know what the increase to Malta has been in the corresponding time? Nil. It further states that fares have been reduced by 43 per cent to 49 per cent during the same period as even corporate travellers occupy economy and low-cost airline seats on short haul flights. When are we going to get it?
Dr Gatt says that LCC's (Low-Cost Carriers)"have been here and will continue to come here, paying the present charges". Where does he get this information? How does he arrive at this statement? Is he referring to a small handful of low-cost carriers that have put on one or two flights a week, many of which have already withdrawn?
Malta needs the major players here. It is universally known that the large LCCs will not pay about €28 per passenger to land people in Malta when they currently pay between €6 and €12 at all other airports they fly to, albeit many being secondary airportsfrom. This has nothing to do with subsidies; it is a simple market reality for them.
It is not simply a matter of bringing any LCCs to Malta and use the occasion as a photo opportunity for somebody who wants this kind of publicity. We need to be sure that we attract the major LCCs whose market visibility reach will expose us to the millions of hits on their websites every day. Imagine the exposure Malta will get if it is included in the schedules of such major LCCs. Our island will be advertised to millions of passengers daily. Regrettably, the same does not apply to the smaller carriers that do not have that kind of marketing clout.
Minister Gatt asked if anyone has given a thought to the foreign tour operators who today bring in the bulk of tourists to Malta. Let me assure the minister that those of us who have been in the business for decades have been dealing with and thinking of the tour operators constantly.
For years, tour operators have been dictating to hoteliers and to to the Malta Tourism Authority their terms to operate at our hotels. It is true that tour operators bring the bulk of our leisure visitors to Malta but this model is changing. Tour operator business, especially short haul, has been diminishing worldwide. One major British tour operator was recently quoted to say that in five years time their entire short haul operation, which includes Malta, would be withdrawn.
On the other hand, there has been a marked shift in people booking their own holidays through special deals that are available over the internet and flying on low-cost carriers.
Why does the minister tell us we have to remember the tour operators? Does he seriously think that because we support LCCs flying to Malta, we are ignoring the tour operators and giving them cause to abandon Malta?
Perhaps his colleague, the Minister for Tourism, has not told him that one of the largest British tour operators, First Choice, has threatened to pull out of Malta completely unless they receive a hefty subsidy from the MTA irrespective of the low-cost airline argument. In fact, I understand that the first edition of First Choice's summer 2007 brochure does not feature Malta at all.
Perhaps the minister has not heard that another major UK tour operator, TUI UK (Thompson), is reducing its programme to Malta for next summer 2007 by some 30 per cent. Like any other player in this business, and this includes LCCs, tour operators and traditional airlines have only serviced Malta when it suited their bottom line. There have been many examples of withdrawal of business to Malta. Many will remember that Air France, KLM, Swissair and British Airways (which returned some years later) withdrew their programmes to Malta when it no longer made commercial sense for them to stay. We have seen untold tour operators drop us when they decided to go elsewhere. This is nothing new Dr Gatt!
Dr Gatt's brief is clearly to defend Air Malta "at any cost" and maybe it is as it should be as the national airline falls under his ministry. But it does not follow that the position the minister is taking this defence in this manner is necessarily in the best interest of the country as a whole. Andi it certainly should not be done by attempts to belittle efforts made by those who have been working in the industry way before Dr Gatt took responsibility for Air Malta and will, no doubt, continue to do so when he has passed on this mantle to others.
The argument that anybody who doesn't agree with Dr Gatt's policy of "no low cost at any cost" is trying to destroy Air Malta, is nonsense and it should stop. If the government does not have the will to think out of the box to stop the malaise that has afflicted our industry, the consequence will be dire for all of us.
Nobody wants us to be held hostage by any low-cost carrier, certainly no more than we wish to be held hostage by tour operators and other airlines that constantly threaten to leave Malta if they don't get their way. It is a question of negotiating the best deal possible, but then I don't need to say this to Dr Gatt who has himself negotiated a number of deals recently.
If some unproductive jobs need to be lost to streamline Air Malta and to make the airline stronger and profitable in the future, I suggest that some of the millions of liri coming out of the sale of Air Malta's properties, such as the Crowne Plaza, should be used to help the economic interest of such people who, many say, were "over" employed' at Air Malta by politicians in the first place.
It is disingenuous of Dr Gatt to bring up the 1,000 families that depend on Air Malta, inferring that if we support the introduction of major LCCs we do not care for these families. We care for them as much as I'm sure Dr Gatt does for the tens of thousands of families who depend on the entire tourism industry in this country and whose livelihood will also be threatened if we just bury our heads in the sand and maintain the status quo. We need to protect people not jobs. If a particular job becomes redundant, the person doing it should be retrained to become a productive member of society. There should be plenty of these jobs on offer with over 5,000 jobs Dr Gatt told us were going to be created at SmartCity.
I congratulate Air Malta for starting up operations outside Malta, even though it has little value to the island's tourism industry directly. If that is what they need to do to make themselves profitable, we commend them; we would never say that this particular business plan is wrong because the Maltese tourism industry does not benefit directly from it.
For the record, I have it on good authority that in fact, Malta International Airport are as concerned about the future number of passengers going through the airport as we are. They are prepared to reduce their landing fees for flights coming from different a number of airports to any airline, including low-cost carriers, which, I am sure, MIA agrees recognise areas a force that cannot and must not be ignored.
Ironically, the government recently announced financial support for both tour operators and airlines, including LCCs, operating from certain airports. These are not called subsidies, which Dr Gatt abhors, they are referred to as incentives and support schemes. Leaving semantics apart, if we add the lower fees from MIA, the government incentives, and some contributions from the private sector, we could arrive at a landing fee that wcould attract the major low-cost carriers. These lower charges would also benefit existing carriers, including Air Malta, to continue to still maintaining a level playing field.
This will, no doubt, bring in the massive increase of visitors that the industry needs. We must also remember that the Maltese passenger will benefit from reduced fares as well as by having direct connections to a large network of flights operated by these carriers. Has nobody realised that the Maltese public are not stupid. We are fed up of having to pay expensive fares and even more expensive taxes and surcharges to leave our country.
It would be more useful if all the concerned Maltese parties had to work together with the sole aim of protecting and promoting the Maltese tourism industry rather than exchange instead of the insults that only serve to benefit our international destination competitors who, I am sure, laugh at our inability to constructively work together in order to position Malta as a top tourism destination.
Mr De Cesare is managing director of Eden Leisure Group, owning company of InterContinental Malta, and past president of the Malta Hotels and Restaurants Association.