Shadow economy minister Claudio Grech said the intended changes at the national airline would mean having to hire an aircraft complete with crew, maintenance and insurance. Photos: Darrin Zammit Lupi/Chris Sant Fournier

Downsizing Air Malta’s fleet would be a “short-sighted” decision that would only make it harder for the ailing airline to face competition, the Nationalist Party warned.

Air Malta has announced it will be cutting its fleet by up to a third in a bid to save €8 million a year. Under the plan, the carrier will operate seven aircraft in winter and eight in summer, down from its present fleet of 10 planes.

“This 30 per cent contraction in the airline’s fleet will result in the loss of further economies of scale, making this more a case of ‘penny-wise pound-foolish’, wiping out most of the savings being anticipated through the termination of the leases,” shadow economy minister Claudio Grech said to the Times of Malta.

In his opinion, the airline should be seeking ways of how to expand its markets rather than become less relevant in the aviation landscape.

In spite of the planned cost cutting exercise, Air Malta has pledged to keep operating all existing routes and carrying the same number of passengers by increasing aircraft utilisation to 14 hours per day. Mr Grech questioned such a rationale. “In peak periods the airline will invariably need to wet lease aircraft from third parties with the inevitable backlash that will bring about,” he said.

This is a very short-sighted decision driven by the low-hanging fruit of a short-term cost reduction

That would mean having to hire an aircraft complete with crew, maintenance and insurance costs. Such a measure could cause friction with unions which, in recent months, were faced with a decision to axe a number of part-time employees, including cabin crew.

“This is a very short-sighted decision driven by the low-hanging fruit of having a short-term cost reduction merely to patch up a financial situation which is the result of commercial decisions that are not reaping dividends,” Mr Grech said.

Tourism Minister Edward Zammit Lewis has backed Air Malta’s plan, saying the maximum utilisation of aircraft was fundamental for the airline’s viability. Noting that fleet reduction was a short-term measure, he said the medium-term plan was for Air Malta to grow.

Under a €230 million restructuring programme agreed upon with Brussels in 2012, Air Malta must become commercially viable by next March, when State aid will no longer be an option. Meanwhile, sources told this newspaper industrial action could be looming as, in a recent meeting, unions drew a red line on the fleet downsizing plan.

Dr Zammit Lewis played down such a threat, expressing himself optimistic that all stakeholders would cooperate for the common good of all the airline’s employees and the tourism industry.

Following an encouraging start, the airline’s five-year plan had suffered setbacks and, last year, the carrier failed to break even, prompting questions on its future. The Opposition questioned why the company veered off target at a time when tourism was at an all-time high and fuel prices had dropped drastically.

Mr Grech criticised the government’s communication approach, saying key decisions had led to uncertainty.

The Opposition would remain vigilant but, at the same time, act responsibly in the interest of Air Malta’s employees and the long-term sustainability of the tourism industry, he said.