New vision and strategy are a must

It is downright dishonest and insensitive for the government to launch a scaremongering media campaign so that Air Malta employees have no other option but to take the so called “voluntary” early retirement schemes.

History, it seems, is repeating itself. This is the same strategy adopted by the government, in collusion with the European Commission, when Malta Shipyards Ltd was privatised a few years ago. This time, however, the situation is very different.

The European Commission, now, has no moral justification to stop the government from subsidising or, rather, investing in Air Malta until the rescue plan starts giving results. Not only has the Commission allowed governments to bail out banks during the financial crisis but even states are being bailed out now!

The report authored by Ernst & Young says more about the mismanagement that went on during these last few years. Contracts for spare parts awarded at way above market prices, jobs outsourced with no apparent benefits, bonuses paid to senior management when all other employees had a wage freeze. But the icing on the cake was when the government decided to subsidise low-cost carriers to develop new routes when Air Malta had done this for years without receiving one single cent from taxpayer’s money.

The rescue plan states quite clearly that if the practice of subsidising low-cost carriers is allowed to continue, then the plan would be seriously jeopardised. The plan also highlights the fact that the continued outsourcing of Air Malta’s core operations, such as engineering and ground handling, will put the company at serious risk of having key activities totally dependent on third parties. Outsourcing in Malta does not make sense in those cases where there is only one other player in the market as this would bring about a monopoly. Air Malta needs to leverage its engineering and ground handling services to its advantage. It is good to note that the airline finally saw the light of day and will not be outsourcing its ground handling and engineering services.

By just downsizing the company for cost-cutting purposes and for increasing some revenue streams, the benefits would be short-lived. If this route is taken, in a few years time Air Malta will be faced with the same problems. Incidentally, this is the second time in a few years that Air Malta is going through a rescue plan. It, therefore, goes without saying that the national carrier needs a new vision and strategy based on growth and on tapping new markets. In fact, our tourism industry as a whole needs a new vision and strategy, which Air Malta and the other players in the industry need to lock into.

For example, the hubbing concept needs to be looked into again. Malta can serve as a short stopover and gateway to European destinations for tourists coming from Asia and the Middle East. To do this one needs the appropriate strategic partners such as a renowned alliance that serves major destinations outside Europe. You also need the local players to lock into this strategy such as Malta International Airport, the Malta Hotels and Restaurants Association, and all the operators in the industry, not least the cruise liners that operate in the Mediterranean.

It is therefore the task of the ministry responsible for tourism and the Malta Tourism Authority to ensure that a new vision and strategy is mapped out for the Maltese tourism industry. Our size should be used to our advantage when it comes to the planning and implementation of this new vision and strategy. Selmun Palace Hotel employees too are facing very difficult times.

Unfortunately, the major shareholder, Air Malta, failed to invest in this jewel and, as with all business, if you do not invest you will not remain competitive and profitability will diminish. Since the Air Malta board now decided to sell the hotel, it should at least make every effort to safeguard the jobs of the 58 employees who are not to blame for this predicament.

Why Air Malta’s board is so keen to issue redundancy notices to all Selmun Palace employees is very baffling considering the fact that it was confirmed (after the GWU let the rabbit out of the hat) that there are three bidders interested in buying the hotel with all the employees. Why Air Malta is now dragging its feet to conclude the negotiations with the bidders is very much shrouded in mystery and begs an urgent explanation.

Mr Carachi is president of the General Workers’ Union.