Would the Chinese model suit Air Malta?

The national airline is never far away from the news pages, not always for the cheeriest of reasons. In recent weeks it made the headlines in the aftermath of fresh losses, regarding which Finance Minister Tonio Fenech commented rather bluntly. A pall of doubt has been raised over the company’s future.

Speaking to this newspaper a fortnight ago, Fenech, whose portfolio includes the airline, pointed out that in today’s market maintaining a 12-aircraft fleet is challenging. It is not only Air Malta, he observed, that has experienced difficulties because of market realities. Other legacy airlines have faced problems.

One can say that again. The minister might also have pointed out that, although questionable decisions combined with market forces drained Air Malta of its reserves, the company has never received a cent from the government since it was set up.

At that time many cynics questioned Prime Minister Dom Mintoff’s business acumen and even political sanity in setting up a national airline.

Private interests were invited to participate by the then Labour government but, bar one brave soul, all were scared away by atrocious Nationalist adverse propaganda. Some voices from those quarters even raised doubts about the airline’s safety, let alone its viability, suggesting with loaded intent that it was a bird made of lead, a very ugly expression in its Maltese original.

As it was, Air Malta not only survived. It thrived. It built up a cadre of Maltese pilots and other airline personnel where practically none had existed before.

It may not have been a model of efficiency, with politics and patronage never living far away from its doors under both Labour and Nationalist administrations. Yet it carved out a name and a future.

More importantly, it underpinned Malta’s drive to become an established tourism destination, in the face of hot competition from other Mediterranean resorts. Were it not for Air Malta supplementing the various tourism support and promotional initiatives by successive governments, tourism would not be what it is today.

In recent years Air Malta, having survived dud leadership foisted upon it by the government, went on to bite more than one consolidation bullet as rising fuel costs and increasing competition from low- cost and other airlines threatened to blow it off the tarmac.

All the unions involved in the local giant company eventually gave their share to effect restructuring plans drawn up under the no-nonsense guidance of Austin Gatt. It turns out that was not enough. Fenech went on to tell this newspaper that it was no consolation that Air Malta was not alone in its woes.

Air Malta is a public company, he said, and under EU rules the government cannot subsidise it – it has to operate competitively. It cannot sustain a €30 million loss per year.

At the end of the day, somebody would pull the rug from under its feet, mainly the banks. “At current losses, we will not manage to sustain the company for long,” said the minister in ominous tone.

So what is to be done? Fenech once again mentioned that old phrase – significant restructuring. He referred to “draconian work practices”, as if the changes effected by hands-on chairmen in recent years had not taken place.

He put up two options: workers can accept significant restructuring in the way they operate, or the government could consider hiving off ground-handling and possibly privatising it. The minister point-ed out other perceived ineffic-iencies, including 383 people in administration and commercial operations.

Then the minister turned cryptic. The government was discussing Air Malta with the European Commission, he said. The Commission would allow the government to inject capital in Air Malta to increase the number of aircraft, “but that is not what the country needs at the moment”.

So, what does it need? I suggest plainer talking, unless a confrontation is to build up with the unions.

One way forward would be to bring in a strategic partner who could bring business as well as funds into the venture. The way China is reaching out into the Western world suggests possibilities.

But if further slimming of the workforce and fresh reviews of work practices are part of the deal, the unions had better be taken into full confidence at the outset.

There’s more at stake than Air Malta itself. Low-cost airlines are helping in the tourism revival. But God forbid that we become too dependent on their mercy.

EU regulations do constrain the government. Although bigger member countries have cocked a snook at the Commission, it is unlikely that our government would choose that path. Nor would it be the one most conducive to serious repositioning of the airline to increase its chances of survival as competition from low- cost airlines intensifies.

It is time for mature understanding of the company’s position by all those involved in it. Harping on wrong decisions of the past will not contribute to a resolution of current difficulties and improvement and sustainability in the future.

Bold fresh thinking and full transparency are required, with all the stakeholders involved every step of the way.