Free or discounted air travel to present and former employees, directors and politicians or their appointees is being reviewed as part of Air Malta’s ongoing restructuring exercise.
The lucrative concessions will be radically scaled down or totally discontinued as part of the cost-cutting exercise to put the national airline back on a sound financial footing, The Times has learnt.
Although the freebies were not considered to be among the company’s major financial problems, as the cost was relatively low, eliminating them would send a message that austerity was needed across the board if the national airline were to survive, Air Malta sources said.
The Finance Ministry, which is steering the negotiations on the airline’s restructuring programme, did not go into detail when asked about the future of such concessions. It said: “The restructuring process is looking holistically at Air Malta’s revenue and expenditure streams and will take the necessary decisions accordingly.”
The sources said although the “freebies” had been in place for a long time, some since the company’s inception, different administration extended them to politicians, politically-appointed directors and their immediate families.
These concessions, some of which form part of collective agreements signed by Air Malta with the various unions, allow airline staff and their immediate families to benefit from free or heavily discounted tickets. Their quantity depends on the position held by employees. For example, Air Malta’s general managers and their families are entitled to four free club class tickets a year and an unlimited number of club class tickets at a discounted rate of €10 each way, excluding taxes.
On the other hand, non-executives – the majority of Air Malta’s staff – are entitled to two free tickets a year in economy class and unlimited discounted tickets at €10 each way excluding taxes.
The schemes, devised according to International Air Transport Association rules, have been extended to all those who in the past 37 years worked with the company and their families. These former workers kept their entitlement according to the grade they occupied.
Apart from staff, the company was over the years instructed by its majority shareholder – the government – to offer free and discounted transport on all its destinations to other categories, not necessarily directly involved with Air Malta.
Unlimited free or discounted travel facilities were extended to all those who occupy, or have occupied, the post of President of Malta, Prime Minister, minister responsible for the Air Malta, chairman, a member of the company’s board and also various company consultants.
According to the sources the list of beneficiaries has become quite long.
Some rules were introduced over the past years to ensure the company does not lose any revenue by accommodating those entitled to the concessions, such as only confirming free tickets only once free space on Air Malta aircraft is available. However, this applies only to staff or former employees. Company sources said the rules “are often abused”.
The national airline, which started operations in 1973, is facing major financial problems, particularly due to high fuel costs, increased competition from low-cost airlines and lack of restructuring.
Last November, the EU gave the green light to the government to extend a €52 million rescue aid to the air carrier to remain afloat. The aid was granted on condition the company initiates a thorough restructuring programme aimed at getting it back on a sound footing. The plan, expected to be presented to Brussels by the end of this month, has to be negotiated and approved by the European Commission.