Labour MP Karmenu Vella, former minister for tourism between 1996 and 1998, yesterday said Air Malta was the real pride of Malta, adding that the national airline had brought wealth to Malta and paid taxes and dividends in the face of strong competition by other airlines, charters and the threats of terrorism. Several others had capitalised on aid received from the government.
Speaking during the Budget debate on the votes of the Office of the Prime Minister, Mr Vella said that in this time of turbulence, which interests would it keep at the forefront when deciding its future – its own or the national economy. It was for the government to answer this crucial question. Having a restructuring plan would be useless unless this point was addressed. No other airline would safeguard Malta’s interests.
Since its start-up in 1973 with €3 million in capital, since paid back seven times over in dividends, Air Malta had amassed €100 million in shareholders’ equity and over €400 million in assets. These included several landing slots at London Heathrow and London Gatwick worth more than €11 million each.
Air Malta had been a pioneer in other sectors, including hotels, because when opening up new routes on the continent there had been no hotels for visitors. It had developed Selmun for Germans, Ħal Ferħ for French and Holiday Inn for Italians. The Holiday Inn had been sold for €53 million, of which the airline had retained only €30 million while €23 million had been pocketed by the government.
Mr Vella said Air Malta had been a major contributor to the balance of payments through foreign exchange and €72 million in taxes. Over the past years it had paid €33 million in social security and €600 million in payroll.
Today it employed 1,400, but one should also consider indirect jobs amounting to over 9,000. It paid €18 million in airport fees. With 40 million passengers it had always been a strategic ally especially in tourism and investment.
Revenue from tourism last year had been €800 million, including €18 million in Air Malta ticketing sales which would otherwise have gone to foreign countries.
Its corporate social responsibility could be seen in the many ways it was not obliged to help but did.
Air Malta had operated a helicopter airlink to Gozo until it had had to be stopped for EU safety rules. There had been no long-running follow-up operation since.
Mr Vella said several workers had learnt and shown their skills not only in Air Malta but also in other airlines.
Among Air Malta’s greatest challenges and problems had been posed by the Avro RJ70 airliners and Azzurra Air, which had left the biggest impact. This so-called biggest investment of $150 million had also been the biggest flop. The profits made in Air Malta’s core operation had been fleeced by Azzurra.
Speaking about the problem of Air Malta’s routes, Mr Vella said the airline today operated both profit-making and loss-making ones. It was almost forced to operate the latter by the government, the MTA and hoteliers. If the three sectors wanted the airline to keep up the routes in their interests, they must be ready to make good for the losses.
They were also a prime reason for the airline’s fleet problem. It needed 12 aircraft in summer and eight in winter, but they kept asking it not to cut seat capacity.
The airline was the victim of overspending on several counts. How could it outsource operations but then have to keep on the staff?
Mr Vella said the fallacy that Air Malta was a hotbed of overstaffing with Labourites must be killed once and for all. On the change of government in 1987, Air Malta had had a payroll of 1,400, which had gone up to 2,000 by 2002 under a Nationalist administration.
The government had been applying since 2006 for a route development scheme to help low-cost carriers come to Malta. But if low-cost carriers were so competitive, why did they need the government’s help?
Most low-cost carriers were UK-based, which meant they had a €10 million annual advantage over Air Malta because of the sterling rate of exchange. When the airline had had to discontinue Birmingham, the low-cost carrier replacing it had been subsidised.
The government always found solutions to help low-cost airlines up to the illogical, such as calling London a new, under-served area. Windows kept being opened for all airlines except Air Malta.
Mr Vella said low-cost carriers now based in Malta were receiving subsidies for each passenger carried, including Maltese. Air Malta had been foiled out of a charter contract from Copenhagen because a Norwegian airline had received a subsidy from Malta.
The 12 per cent increase in tourism could not all be attributed to low-cost carriers. They had not been flying in 2007 and 2008, which had been Malta’s best years ever. If the French market had increased by 35 per cent, with no low-cost operations, it meant it was all due to Air Malta.
Air Malta could make profits if it stopped its loss-making routes and took other measures. But did the country want this at the expense of its national economy? The government seemed to be intent on restructuring at all costs. It could not keep harping on Air Malta’s importance while undermining its viability.
Another way would be for Air Malta to keep looking after the national interests, make less profits but receive subsidies.
Mr Vella made it clear the workforce were not to be made scapegoats. All sacrifices to date had been bottom-up, but if the problems were coming from the top, this time it would have to be top-down.
Up to now the government had always employed divide-and-rule tactics, talking to one union at a time. It must talk to the unified works council that already existed.
The economic sectors, especially the MTA and MHRA, used to be Air Malta’s best partners and the results had come. There should be a national strategy framework for others to form part of. The two bodies particularly must never underestimate the importance of Air Malta for their business.
Concluding, Mr Vella said Air Malta must continue to exist for Malta’s future. If it was the government that had dropped it into the mess, it must now be the government to get the national airline out of it.
Labour MPs Leo Brincat, Helena Dalli, Stefan Buontempo, Silvio Parnis, Gino Cauchi and Owen Bonnici as well as Nationalist MPs Michael Gonzi, Ninu Zammit, Jeffrey Pullicino Orlando, Joe Falzon, Francis Zammit Dimech and Stephen Spiteri also contributed to the debate.