Business • January 18 2004

Cruise liner tourism seriously threatened by EU tax protocol

- 180,000 cancellations already for 2004

The sight of cruise liners along Valletta’s Sea Passenger Terminal has these days become a very familiar one, with the lucrative sector adding substantial value to the tourism sector as well as to the pockets of Valletta shopkeepers and other cottage industries that service the once booming tourism segment.
But this is all set to change come 1 May, if cancellations being reported by the Malta Federation of Associations of Travel and Tourism Agents (FATTA) are not reversed this year.
The cancellations are the result of a European Union tax protocol, which allows cruise liners to operate their duty-free concessions only if their itinerary includes a port of call outside the EU.
This major advantage was a key aspect in cruise operators’ choice to make Malta a port of call and was enough to offset Malta’s competitive drawbacks in the sphere such as the high port charges and passenger taxes.
As a result of the legislation and Malta’s upcoming EU accession, FATTA said this week that it estimates, according to reports it had received as of Tuesday, that no less than 142 regular cruise calls have already been cancelled for 2004, representing 180,000 passengers.
Considering the fact that just over 375,000 cruise liner passengers visited Malta over the first 11 months of 2003, the cancellations would strike a grave blow to the sub-sector, possibly reducing its numbers by as much as half.
Even worse, FATTA says it appears there would be further cancellations in the pipeline.
The development, FATTA explains, is a substantial blow to the Malta Tourism Authority, which has just pioneered the setting up of the Malta Cruise Network to promote Malta as a cruise liner destination.
The state of affairs is expected to prompt cruise operators to drop Malta for other, higher profile ports in the EU that, while offering less appealing tourist attractions, nevertheless offer lower port charges and passenger taxes.
In a statement issued this week, FATTA recalls how in 2002 and earlier this year, it had informed the Tourism and Foreign Affairs Ministries of the potential problem that would arise as a result of Malta’s EU accession.
FATTA is now calling on the relevant authorities to review the structure of charges and taxes associated with port calls for cruise liners with a view to putting Malta back at competitive levels with its neighbouring ports.