Malta is an island at the extreme end of the EU, and islands need connectivity to grow and thrive. The MHRA has been consistent on this principle since the day the national airline was established way back in 1974. But the world of 2016 is a far different one than that of 1974 and more so for the airline industry.
With Malta’s membership in the EU came many benefits but also challenges. One of these was the single market for the aviation industry, where it was now possible for any EU airline to fly from and to any EU airport without any restrictions whatsoever. And so, Europe gave birth to low-cost airlines, a model which had been in operation in America for several years. This changed the business dynamics completely and when, eventually, LCCs arrived in Malta, Air Malta’s old business model was found deficient and non-competitive.
However, with the benefit of hindsight, the introduction of LCCs in Malta was probably one of the most important decisions made, because it has drastically favoured the tourism sector as a whole.
The presence of low-cost airlines threw the spotlight on the way matters were being managed at Air Malta in addressing the new realities of the market. It was immediately evident that the business model in managing Air Malta needed to change. Many talked about it but the action has been, for one reason or another, very slow in relation to the dynamic developments of the international aviation markets. Indeed, Air Malta absorbed some €250 million in taxpayers’ and airline money and yet, the much sought turnaround seemed unable to take off.
Over the past two years, the current administration has recognised that the challenges at Air Malta couldn’t be further procrastinated about. Accordingly, the shareholders have embarked upon efforts to establish a strategic partnership with an established airline, aiming to benefit from synergies and further develop new markets. Throughout this process, the MHRA did not sit pretty and do nothing.
The MHRA believed then and still believes now that there is a ‘Maltese solution’. We presented our model, which called for bringing together Maltese private investment (50 per cent), an established airline (30 per cent) and the government (20 per cent), thus ensuring that the Maltese retain the majority shareholding.
The next steps to be taken at Air Malta need to be clearly defined and agreed to this year
Indeed, we have argued that Malta, being an island, cannot afford to remain dependent on foreign airlines or having its airline managed by a foreign company. It is not in my scope today to explain why not, as this is a subject which has been dealt with by many and exhausted on various occasions. What, however, I wish to highlight is that, today, all key stakeholders recognise that Air Malta matters.
Indeed, achieving this consensus was not an easy feat. The MHRA was always at the forefront advocating this principle, such as when it was the first economic and social partner to support the airline’s restructuring plans presented some years ago to the EU institutions. The risk we now face is that we are running out of time.
Air Malta remained a political dinosaur for far too long. Now we have high expectations. While perfectly understanding the commercial sensitivity of the current situation, the recent communications addressing Air Malta in relation to the status of the negotiations with potential strategic partners were definitely, shall we say, not too diplomatic. It is better not to communicate any form of news than to send messages which are contradicted within hours.
Because Air Malta matters, we cannot do anything that might jeopardise the future of our national airline. All stakeholders must work together to avoid any possibility of losing the airline. In this situation there are no ‘us and them’ and, ultimately, there will be no winners or losers.
Air Malta must remain in Maltese hands and must remain flying, as it matters to all.
Over the past months, we have seen millions being invested by the hotel and restaurant sectors in refurbishments and upgrades with a view to refresh our product. Airlines that never operated in Malta are being attracted to the island for various reasons, including the hard work that is done by all the tourism stakeholders but also because we are one of a few safe destinations in the Mediterranean region. The success is clear, but not all is a bed of roses.
The recently-announced initiative to reinvest the 50c environment contribution funds through a government and MHRA co-led foundation into embellishment projects at tourism zones is positive. However, the challenges related to the poor and ill-maintained infrastructure and surrounding environment are at best not decreasing. It’s time to start promoting real solutions rather persisting to keep pushing failed public sector models.
Air Malta is and still remains a crucial link in this chain of successes for our economy and nobody wants it to disappear.
There are no second chances; the next steps to be taken at Air Malta need to be clearly defined and agreed to this year, preferably by all the stakeholders.
One needs a strong, vibrant and Maltese-led Air Malta, since the airline plays and will continue to play a key role in our economy.
Malta needs the best deal that meets both the commercial and social objectives. This is because Air Malta matters.
Tony Zahra is president of the Malta Hotels and Restaurants Association.