Low-cost ‘not to blame’ for Air Malta woes

It is “incorrect” to blame Air Malta’s problems on the introduction of low-cost airlines as they posed the same challenges as they did for other airlines, according to Tourism Parliamentary Secretary Mario de Marco.

Wrongly identifying the sources of its problem was the worst thing to do for Air Malta which needed “real solutions” to make it financially stable, he said.

Addressing yesterday’s annual general meeting of the Malta Hotels and Restaurants Association, Dr de Marco said all airlines had gone through financial problems but it was incorrect to blame Air Malta’s struggles on low-fare carriers, whose introduction was “inevitable”.

He produced statistics which showed the shift from traditional airlines to low-cost. From a 26/74 ratio in 2006, with 26 per cent flying low-cost, the ratio had shifted radically to 39/61 this year.

“For the sake of the tourism industry and Air Malta employees, we have to concentrate on the real solutions to the real problems rather than attempting to score cheap political points,” Dr de Marco said.

He noted that tourist arrivals until September rose by 12.6 per cent over last year – an increase of 120,000. Tourist spending had reached €914 million, an increase of €177 million.

Tourist arrivals had peaked in June, adding it was not “sheer coincidence” this had happened soon after the introduction of new routes from more destinations. Malta is now served from 76 airports, up from the 56 to which the country was connected last year.

Dr de Marco also referred to the new two-tier bus fares. He said the structure did not discriminate against tourists as the distinction was being made between residents and non-residents, who could also be Maltese.

He mentioned the millions being spent on several infrastructural and restoration projects, all in a bid to improve the product.

Referring to the criticism of the government’s decision to raise VAT on accommodation from five to seven per cent, Dr de Marco said the Finance Ministry was considering granting a rebate on part of the two per cent increase on pre-signed contracts.

The Finance Ministry and the Malta Tourism Authority were sifting through the contracts it had received from hoteliers who had complained the VAT hike would translate into around €3.6 million in extra costs as agreements had already been signed.

The government never said its concession would cover the whole two per cent increase but neither did it ever spell out that it would only cover part of the increase.

MHRA president George Micallef said the VAT increase would “exacerbate” competiveness and profitability problems that hotels were already facing.

Dr de Marco said that while the government was conscious of the impact this increase would have on pre-signed contracts, it was important to remember the higher financial allocations the government was making to the tourism sector, which ultimately benefited the hoteliers. This had increased to €35 million this year from €26.4 million in 2008.

The meeting was also addressed by Prime Minister Lawrence Gonzi and Labour leader Joseph Muscat. The latter lambasted the government for failing to have a proper strategy on tourism and of “fighting fires with blankets”.

The government’s approach to tourism lacked a “quantifiable and verifiable strategy”, he said, including the lack of a full-time tourism minister.

Dr Muscat said his party, once in government, would consider the bigger picture and not focus simply on winning elections “but generate sustainable jobs through increased growth and profits for operators”.

“The government has to go beyond press releases about tourism arrivals,” he said, adding that what the government should be looking at was whether these arrivals led to higher profits for operators.

In his speech, Dr Gonzi said that while the opposition was advocating the need of a tourism strategy, the government was implementing this as part of a wider strategy.

“How in the name of Heaven can we speak about tourism without speaking about waste management, sewage treatment, upgrading roads, the environment and investing in education?” Dr Gonzi asked.

“Tourism hinges on many other areas and the country needs a flexible strategy which can change according to the circumstances of the world around us. This is our way of doing things,” he said, adding that tourism did not depend on the tourism minister.

The meeting was also addressed by a representative from TripAdvisor who noted that Malta’s page on the site received an average of 1.5 million visits a month, with “massive peaks” in the summer months, “more than any other Mediterranean destination”.