Ryanair insists on lower airport costs

Ryanair is threatening to drop some services to Malta in winter and withhold further growth in the absence of lower airport costs, given rising oil prices.

Despite announcing carrying a record 350,000 passengers since starting operations in Malta 18 months ago, Ryanair is planning to axe "possibly one or two" of the existing eight routes in the leaner months if the situation prevailed.

"Further growth or the establishment of a base (in Malta) is unrealistic in the absence of lower airport costs, particularly in a market environment where continuing record oil prices threaten to make some existing routes unviable," Bridget Dowling, Ryanair's sales and marketing manager, said.

Ms Dowling would not specify which routes risked being dropped or how many.

This forewarning is being taken seriously by Malta Tourism Authority chairman Sam Mifsud, who, however, stressed when contacted, that, so far, no decision had been taken yet. "I have a meeting with Michael Cawley (Ryanair's chief operating officer) next week to discuss this matter, among others," he said.

The news emerged from a press conference held at the Radisson Golden Sands Resort Hotel called to give a recap of Ryanair's progress since it began operations to Malta in October 2006.

"Malta has huge potential to grow its tourism product. However, this requires vision from the Maltese government to lower airport taxes and prioritise growth, choice and competition by opening up the island to the low-fare revolution, which consumers in other European countries have enjoyed," Ms Dowling said.

This decision could also form part of Ryanair's overall plan to ground about 20 aircraft this winter to counter the impact of spiralling fuel costs and its commitment not to introduce fuel surcharges on any of its routes.

According to Flight International magazine, the Irish budget carrier was embarking on an extensive cost-cutting drive for its 2008-09 financial year, as fuel costs threatened to widen by $300 million, pushing its profits down by 50 per cent.

Mr Cawley was quoted as saying: "This winter is going to be very difficult. We will put 20 aircraft on the ground for the winter because it's more profitable. We would just lose a lot of money (operating them), burning fuel".

When asked what Ryanair was expecting from the government, Ms Dowling said the talks were confidential and no figures could be released. However, though the government had made some changes, these were not enough.

"The government is well aware of what we're asking for. We need lower airport costs, because, though the routes are performing well, we may not be able to sustain the yield on certain flights," she added.

Asked if Ryanair was toying with the idea of completely withdrawing its operations from Malta, Ms Dowling said it hadn't come to that yet, but added that "what happens after the winter months is very much in the hands of the Maltese government".

Ryanair was keen to set up a base in Malta but this was "unrealistic" in the absence of lower airport costs. Ms Dowling cited Pisa as an example, saying that when Ryanair began its operation in the 1990s it was a declining airport but when it set up its base in 2006 passenger numbers shot up.

When contacted yesterday Rosette Fenech, Malta International Airport's head of communications, said it was "premature" to speak of a base in the light of Ryanair's consideration to reduce its routes.

Asked if Malta stood to gain if Ryanair used MIA as its base, Ms Fenech said the company always appreciated growth but it had strict non-discriminatory policies of incentive schemes, which were open to all the carriers.

On the issue of whether or not Ryanair was breaking any contractual agreement by deciding to drop a route, Ms Fenech felt it was not prudent to enter into these legal matters for the time being.

Meanwhile, MIA insisted in a statement that its charges were reasonable.

"MIA's passenger service charge, security fees and landing fees have not changed since April 1, 2006 and will not be changing in 2008. Given that these charges have not increased in any way since Ryanair started its operations to Malta, MIA cannot acknowledge any correlation between its charges and Ryanair's consideration to reduce its capacity on Malta," MIA said.

"MIA also particularly appreciates the introduction of new routes in autumn 2007 by Ryanair, all of which fall under MIA's established growth incentive scheme for new routes as in the case of Bremen, Stockholm, Girona, Treviso and Valencia.

"MIA appreciates Ryanair's contribution to passenger growth as well as to Malta's tourism industry in general."