The irony is palpable. When I was CEO of Air Malta, and while we had our differences, I always felt we had the support of the Malta Hotels and Restaurants’ Association, and in particular the DG. However, they did argue that without Air Malta the tourism business would suffer and of course as hoteliers and restaurateurs they would be at the forefront of any downturn in the number of visitors.
I always felt this was complete nonsense and the latest figures for visitors to Malta tend to support my view. KM has far fewer flights this year than last, yet the number of visitors continue to increase magnificently.
Furthermore, the irony is further heightened when you argue the case for competition. In 2002 I commissioned some European research into how many passengers travelling on low-cost carriers, notably Ryanair, had never flown before. The result? 76 per cent.
The purpose was to prove to my then management team at Brussels Airlines that rather than these “scallywags” taking our business away (the management team argued that such competition hastened the demise of Sabena, i.e. bankruptcy) they had in fact grown the size of the market and that all the airlines were now benefitting from such a phenomena.
The same situation did and does exist in Malta. Whether the Maltese approve of the low-cost carriers is quite honestly irrelevant: the EU in 1993 gave its blessing to creating the internal market and millions of passengers have taken every advantage to travel since, including those that visit the islands of Malta.
Competition breathes growth and providing you manage your costs and provide the service that customers require, you have a good chance to survive.
Furthermore, many argue of course that if such low-cost airlines had not been given the right to fly, unhindered, into Malta, then KM would have survived without state aid and would now not find itself in a very precarious financial position.
To that I say rubbish, the very poor processes and procedures which we inherited in 2010, the expensive third party contracts, over staffing, the club atmosphere and the general lack of direction and leadership had all taken its wearisome toll on what I found to be a generally hardworking and passionate workforce.
There is a business solution to the plight of KM, part of which will require a serious reduction in manpower and a belief that not everyone in our business is politically motivated
Every company has competition of course, but in the case of KM, the strongest competitor was the airline itself! It was a classic case of burying the head in the sand, but more significantly, then adding cement by blaming others and not seeking to make the necessary changes until forced to do so by the government of the time, who then had to satisfy complicated EU rules to legally receive State aid.
No, had the low-cost airlines not been allowed to fly into Malta, I would suggest that tourists would not have increased to their current levels. The airline industry itself has helped the country reap its rewards by providing good value connections helped by the fact that Malta is a wonderful island for a holiday and has such a robust hotel and restaurant business. You need a national airline that compliments that, not continually argues that life is unfair.
The airline industry, particularly the low-cost carriers, have created new swathes of visitors – the issue for KM, was and is the high cost of production, overmanning and a belief that someone owes you a living.
Doesn’t work. When I joined KM, for every €1 of revenue, it cost us around €1.25 at an operational level to generate it – we drove that down to around €.95.
I heard all the arguments of course, not charging for cargo, dubious deals, monopoly airport and many others, all of which were investigated and where true, changed. But in essence the key was to drive the operational cost such that we had a strong business plan to compete and receive a good share of the market, not because we were entitled to it as national carrier but because we earned it through hard work, diligence and ultimately respect.
The great shame today is that the many genuine people who fought and helped us make those changes in KM are, again, in a very difficult position.
Yet there is a business solution to the plight of KM, part of which will require a serious reduction in manpower and a belief that not everyone in our business is politically motivated.
And the solution is not just for KM but an opportunity for Malta. In my experience around the world, people want to realise their dream of being able to make a difference in their own country. There is a real, genuine desire, by honest workers, to make the airline successful.
The question is, do the board and the government have the temerity to listen? I have tried but they are not returning my calls – perhaps there is a misaligned perception of what we can achieve; once bitten twice shy.
Peter Davies is the former CEO of Air Malta.