Charles Mangion | Sunday, 31 January 2010

Bookmark and Share

Keeping Air Malta airborne

Air Malta is the backbone of the Maltese tourism industry and as such, it has to be treated very differently from any other government investment. The fact that in a few months’ time Air Malta is expected to announce disappointing results makes it that much more urgent to discuss its future.
Despite years of restructuring, where our national airline has seen the shedding of practically all its subsidiaries to concentrate on it core business, the company is still not out of the woods. The reasons for this are various and they need to be highlighted in order to understand what solutions are needed to help the company to remain airborne.
The bad strategic decisions taken by the Nationalist administration in the 1990s have undoubtedly weighed heavily on the performance on our airline in the past two decades. First there was the scandalous way in which the company procured a number of Avro aircraft that were not only completely unsuitable for the needs of our airline, but also far too expensive. Despite technical advice against the proposal to buy these aircraft, the Nationalist government gave the green light to the management of Air Malta to go ahead with this disastrous decision.
When Air Malta found that it was no longer feasible to keep using these aircraft they leased them to Azzurra Air, a subsidiary operating from Bergamo in Italy. We all know how Azzurra drained the financial resources of Air Malta for several years before it was unceremoniously closed down some years ago.
The generally difficult economic climate in the last few years has created great difficulties for many airlines, including Swiss Air, Alitalia and Sabena and recently even Jal airlines. International terrorism, the escalating cost of fuel, and economic recessions made it difficult for most airlines to break-even, and they have had to depend increasingly on their respective governments to bail them out a number of times.
The introduction of low-cost airlines like Ryanair and EasyJet eroded the client base of most traditional airlines, who often had to maintain routes that were not commercially viable but where needed to promote easy connectivity in the more important European areas.
In the case of Air Malta it has to keep the Gozo helicopter service going for a number of years, even if it was not commercially viable. It also had to keep some uneconomic routes open to promote tourism form destinations that were considered of strategic importance for our tourism industry.
The schemes aimed at reducing costs were rarely successful enough to encourage workers to take voluntary early retirement. The result is that today, the running cost of our airline remains high, and there are no clear plans on how these costs are going to be rationalised.
The risk that the company is facing is that the present administration will exploit this situation to throw the baby out with the bath water. One hopes that the current rumours that the government plans to divest from Air Malta and leave private investors to continue with the restructuring process are just rumours.
No private investor can even have the commitment needed to continue to use our national airline as a means to promote tourism. Those who promote laissez-faire policies on the conviction that the market is always right and a privatised Air Malta will achieve the success that is eluding it now and that it is owned by the state, are obviously mistaken.
The current worldwide economic crisis has shown that when push comes to shove responsible governments do not shy away from taking drastic action to protect national interests. Such actions undertaken recently included directly and or indirectly the re-nationalisation of important industries, including banks and airlines.
This is the attitude we expect the government to take to save Air Malta from the hands of speculators. Economic patriotism is fashionable again, and we have no problem supporting our government when it practices this pragmatic economic strategy, as larger countries like France are already doing.
So let us all unite to keep Air Malta airborne while continuing to improve its performance by further changes in the way is managed. Our national airline is too important to let it be devoured by voracious speculators whose only interest is lining their deep pockets.

Charles Mangion is shadow minister for finance


Any comments?
If you wish your comments to be published in our Letters pages please click button below.
Please write a contact number and a postal address where you may be contacted.



Download MaltaToday Sunday issue front page in pdf file format


Transparency and procurement procedure

Copyright © MediaToday Co. Ltd, Vjal ir-Rihan, San Gwann SGN 9016, Malta, Europe
Managing editor Saviour Balzan | Tel. ++356 21382741 | Fax: ++356 21385075 | Email