Now it's an Irishman 'bearing gifts'!

Hit by the negative events of 2008 that resulted in a sharp global downturn in consumer and business confidence and spending, worldwide tourism lost momentum in the second half of last year and has now fallen into recession. Today one of the prevalent issues in the tourism industry is the severity of the effects of a global recession that has provoked a trend of lower consumer spending.

Malta, where tourism accounts for a quarter of its economic activity, has not fared so badly in this situation. But our tourism industry is still struggling and trying to cope with the new circumstances: in our traditional markets holidaying abroad is becoming more of a decision taken on the spur of the moment and involving fewer days.

This is so different from the steady flow of tourists that used to be provided by tour operators in the past that some of our service providers are still at a loss about what is actually happening. Marketing efforts during the 'booking season' are no longer enough, simply because there is no longer a 'booking season' as distinct from the traditional tourism high season.

With this background, Ryanair's offer to set a two-plane base in Malta is surely quite an attractive lure. The Irish low-cost airline insists that if its 'offer' were to be accepted, the annual number of passengers it carries to Malta would reach 1.1 million, and our economy would be some €270 million richer with over a thousand jobs being created in the process. At face value, it seems too good to be true.

But is it? Some time ago when it was evident that our tourism industry had relied too much on tour operators who kept wanting more support from Malta, I warned that if government was not careful, we could end up in a similar dependence type of situation with low-cost airlines trying to call the shots.

Ryanair's 'offer' brings about with it a series of demands including a reduction in airport charges and government subsidies that the airline says could easily come from our country's tourism advertising budget. Ironically, this leads one to conclude that the term ' low-cost' applies to the money paid by the passengers carried by the airlines but does not apply for the country that finds itself having to fork out even more financial support for each passenger.

Up to now, Malta has played its 'low-cost airline card' well, subsidising flights on particular routes that were untapped potential markets while avoiding any threat to the legacy of scheduled carriers, especially Air Malta. In short, we have avoided putting all our eggs in one basket - a situation that could easily occur if Malta were to rush and open its gates to the Irish 'bearing gifts'.

Malta does not need to replace scheduled carriers with low-cost ones. This would be a grave mistake: we need to supplement these carriers and not to replace them. This is being done by the sensible policy of restricting help to low-cost airlines opening underserved or new routes in order to increase accessibility from European regional airports.

The results of this balancing act are that between 2007 and 2008 the percentage of tourists visiting Malta carried by low-cost airline increased from 14 per cent to 22 per cent; those carried by chartered flights increased from 17 per cent to 19 per cent; while those carried by scheduled flights decreased from 69 per cent to 59 per cent. It does seem that a happy medium has actually been struck.

We must avoid over-dependence on low-cost airlines. Such a situation could warp the market that would be very difficult to be re-aligned should these airlines pull out if their projected number of passengers do not materialise.

Low-cost airlines are only loyal to their profitability as can be seen from what happened last October in the case of Valencia where a disagreement with the local authorities over the allocation of marketing funds led Ryanair to close its base there with the loss of 70 weekly flights - a move affecting the loss of 750,000 passengers a year and 750 jobs in the region.

Ryanair's 'investment' of over $140m - in Valencia since 2007 - was then moved to another base. Ryanair accused the authorities in Valencia of telling it that no funds were available for cooperative activity when they were granting a €12m worth of marketing support to a local airline; and that they had ignored Ryanair's request for 'engagement on important promotional issues', turning down all reasonable requests for meetings. The tourism industry in Valencia took months to recover, if it has recovered at all.

For Ryanair this is all grist for the mill. In June last year, Ryanair unveiled a new route between Bari and Malta, replacing the less viable service to Bremen - some two years after the airline had chosen Bremen as one of its operating bases.

Malta's tourism can ill afford to end up depending on one 'gift' that would then oblige us to acquiesce to all demands made by the 'donor'.

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