Government knew Air Malta was declining, and it did nothing - Albert Mizzi

Air Malta's founding chairman Albert Mizzi says airline needs proactive approach to marketing and not just cost-cutting.

28 June 2011, 12:00am
by Nestor Laiviera

3 min read

The first chairman of Air Malta has said the national airline needs a general overhaul and a greater effort in exploiting new markets, over and above the cost-cutting that is to take place.

Contacted by MaltaToday on the first draft restructuring plan leaked to the press, entrepreneur Albert Mizzi said that much more was needed to bring the airline back on its feet. “Cost cutting by itself is not enough. It is only the start. Cost cutting is only a contributor in a much more far-reaching restructuring process.”

He said that Air Malta would need to undertake a complete re-examination of the company’s systems, such as those that govern ticket pricing, its internal structures, its existing expenses, and all procurement contracts.

Mizzi was Air Malta chairman for 19 years, and helped found the company in 1973, along with other state companies like Sea Malta, Middle Sea Insurance, and Mediterranean Oilfield Services.

“It won’t be an easy operation, but given the current situation, there is no alternative,” he said. “If government wants to save the airline, they have to go the whole hog.”

Mizzi was categorical about the way forward: “It means that it will have to be a drastic top-to-bottom reform.”

Saying that he hasn’t been privy to the contents of the restructuring plan aside from media reports, he said that “they [Air Malta] will have to be lucky if they want to turn a profit by 2014.”

He pointed to the rapidly changing and unpredictable competitive nature of the aviation industry and said that it was hard to predict what the competition will develop next. “You never know what other people are thinking,” he said, adding that the airline will certainly need to periodically re-evaluate its plan along the way.

Mizzi also said that reform and cost-cutting is all the more necessary among the company’s higher echelons. “Those workers in difficult circumstances need to see and understand that the airline is cutting away those benefits enjoyed by the airline management.”

He welcomed Air Malta’s announcement that it would be freezing complementary flights previously handed out the Prime Minister and the President of the Republic. “That is good for workers to see and know.”

He also urged the airline’s management to look towards opportunities it can develop and generate additional revenue through to support cost-cutting initiatives. “If they do not develop opportunities that lie before them, they will fail.”

Mizzi also noted that a proactive approach to marketing has been absent in recent years. “In these last years, Air Malta was simply coasting along as if without a rudder. The government knew it was declining and yet it did nothing. It should have acted before. Everyone knew. Now there is no other way forward.”

MIzzi also underlined the importance of Air Malta’s survival. “It would be a godsend if the company manages to endure, and the salvation of the workers that are kept on. The airline is crucial for the country.”

But he expressed displeasure at news that Air Malta pilots’ union ALPA was threatening industrial action unless unless the Malta International Airport ramps down the tariff it charges to Air Malta flights. “I would be a disaster,” he said. “Imagine the effect of Air Malta flights being grounded on tourism, businesses, and exports. It is a lifeline of the country, so I hope it was only a threat.”

He conceded that the pilots’ association is fighting for its survival and for the future of the air line. “I don’t blame them, but at the same time one needs to be careful and not treat the country’s wellbeing as collateral damage.... such a strike would have enormous consequences that ALPA might not be aware of.”

More from Nestor Laiviera

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My background is Brand and Trade Marketing and having worked as such with the second global tobacco player. This company uses the top notch of brand marketing and business strategies for which I had been privileged to having perused them successfully. Though the airline and Malta's tourism is a different industry still the principles of sound and effective marketing strategies and applications still hold in a competitive environment. What I see is that one basic tool is missing in our tourism/airline drive - is of a continuous concerted effort to monitor the tourist market trends over time. By this I mean that the MTA should have collected continuous data and informative data of consumer at least twice a year (traveller information) direct whereby all tourist providers may be able to assess their marketing effectiveness to ensure every one cent spent would render a revenue greater than the one cent. Ryannair carried millions of tourists and knew their motivations in real time. I challenge MTA to give me the trends over the last ten years of the travelling patterns of the British German French Italian tourist by Socio Class, by age, by a consumer cluster segmentation (not product segmentation), by previous destination choice and regular destination choice, by product segmentation (sun & sea,cultural, conference). Not information from those who actually visited Malta but by those who did not choose Malta but preferred using destination elsewhere in the Mediterranean - OVER A PERIOD OF AT LEAST 5 YEARS. A country whose livelihood depends on tourism this is crucial. One should never leap into the dark. Mind you let it be said that Malta is one of the success stories in tourism as tourism is the backbone of the economy. This said it neither does it mean that we should still let ourselves stay in the dark as our competitors like Cyprus Italy and Spain would do anything to lure the tourist towards their countries. Do you know that 1.8 million visit us each year? Do you know that the cruise liners are seafaring hotels and we do not have the 3/4th star hotels on our hard rock as we are closing our hotels and building old age residential complexes? Come on Malta wake up. Cannot we offer old age complexes to our EU Member State cheaper than they could in their own countries. Airline's woes to me is our failure to seek opportunities of new innovative national strategies forward. Wouldn't this solve the occupancies of the vacant 70,000 odd apartments we have to sell? My problem is that the players in tourism experts in their field fail to realise that clever marketing is to know the trends before they dig deep into the financial pockets.

Paul Sammut •

@not amused. The bottom line is that AirMalta was CREATED when no one dreamt of Malta having its own airline managed by Maltese with planes flown by Maltese pilots, gave essential services even at a loss which services would otherwise have been unavailable to the country, employed hundreds of workers with very good wages and yet still made BIG profits. We call that excellent business performance with a social conscience. On the other hand, the disastrous money-no-problem policy practised during the last 25 years has brought the company to its knees. We are now reaping the results of those years of mismanagement. Today, instead of grabbing the bull by the horn Gonzipn just blames others, talk talk talk and appoints foreign expertise so that when everything goes down the drain they get the blame as well. We are not amused. My friends, biex tmexxi trid tkun akkontabli u kapaci u jrid jkollok par idejn sodi ta`vera u mhux mutetti, paroli, pozi u pruzunzjonji.

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Tara u tisma statements serji bhal dawn, min persuni bhas Sur Berti Mizzi, u Alla ibierikna ( ghax ahjar hekk ) hadd ma huwa accountable u responsabli. Ara meta haddiem jghamel l-icken zball, intajrulu rasu. Allura ghawn Malta ministru jista jaffeg kemm irid ghal hames snin shah u hadd ma jista jigbiddlu widnejh? Meta hemm akkuza serja bhal din, meta il PM. stess ammetta li ilu jaf aktar min 7 snin bl-inkwiet, u xorta jibaghat lil haddiem il garanzija bil miktub, ( li ghalija hija dokument ufficjali ) li mhux x`ser jitilfu posthom 3 snin ilu, allura dan mhux qerq fil wicc ? Jien nemmen li l-haddiema ta l-AirMalta li ser jispiccaw ser imorru tajjeb ( finanzjarjament ), pero, xorta ser jigi zmien li ser ikunu piz fuqna.

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@eagleeye first of all I mentioned management staff & not clerical. After 25 years of course a process of facelifting is inevitable. PN just continued on the LP model i.e. jobs for votes. You are simply saying that it was right during the labour govt but excessive during the pn tenure. hmmm somehow that sounds a bit hollow if I may say so....after all one can argue that PN employed more people....right ! Mizzi was chariman during the golden times where the industry was making bundles of money but you are forgetting what the price for a flight was back then and what the going rates are now. From a consumer point of view, unbeatable value for money and I doubt whether we Maltese are prepared to pay a lot more just for the sake of having our own airline. At least we both agree that KM was milked big time by successive administrations and we only differ on when it began.

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Good morning please go back in time for the last 30 years or so and picture all electioneering politicians voicing the platitude,'ghandna fiducja fil-haddiem malti' as a show of new found confidence. But look at the track record, Maltese workers can do anything that foreign workers can do as long as they are allowed to do without any interference. Sadly it has become quite obvious that the present government is still stuck in colonial times as they believe that foreigners are better suited to manage enterprises! I will not illustrate just go through the last 30 years or so.. Why does the minister responsible for Airmalta always act as if they are running it? When Lawrence Zammit was Chairman you would have mistook Austin Gatt for Airmalta's Chairman. Please keep in mind that you cannot run business with a political mindset, politics and business do not mix. As for the restructuring process: we needed to start restructuring this company ages ago but was there any political will to get this company, now so vital to the Maltese economy, back on its feet? Forget Bryanair, allow maltese enterpreneurship to really compete and we compare the results, but on a fair and level playing field. If they want to subsidize new or underserved routes that is fine but please define what they actually are!! Lastly I am all for downsizing the workforce as long as the other parts of the equation, namely the shameful contracts with MIA and catering etc.,are reviewed too and real value for money concept is achieved. Whew that's off my chest...where's the coffee....

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@ not amused Kieku kellek tmur iddur l-ufficini tal head office malajr tinduna kemm hemm haddiema klerikali li huma zghar, u li kieku impjeghom is-sur mizzi, dawn jew kienu ghadhom bil harqa, inkella fl-ewwel snin tal primarja!! Int insejt li il- gvern ta gonzlipn ilu kwazi 25 sena fil gvern u kellu cans bizzejjed jekk kien hemm xi problemi fl-airmalta isewwihom. Iccekkja daqxejn kemm dahhal nies qabel u ezatt wara kull elezzjoni, infakkrek biss li is-sena l-ohra dahhal, 12 il-pilota u 18 il-cabincrew tal post li ma kienx hemm bzonn. Lill 11 minn dawn il- piloti hallsulhom it -tahrig kollu l-Airmalta, weghdi ta qabel l-elezzjoni? Le ma tarax!! Infakkrek ukoll li is-sur mizzi hallkumpanija likellha ma l-20 kumpanija sussidjarja ( ghax dejjem investa matul is-snin u ma baqax b'idu fuq zaqqu), l- Airmalta kienet tixtrihomhi l-ajruplani u mhux tikri ( kellha 8 li jiswew mat 30 miljun dollaru il-wiehed) u mat 80 miljun lira maltin (f'valur tan 1987) creditu fil bank, min dan ma baqa xejn ghax il- korrotti tal pn dejjem uzaw lill kumpanija ghall skopijiet politici taghhom u hadu diversi decizjonijiet oxxeni u zbaljati. Nghalaq billi nghid prosit lill Kaptan DOMENIC AZZOPPARDI li mhux qed jibza jikxef l- oxxenitajiet li saru fl-Airmalta.

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Our politicians has brought Air Malta to this predicament. Shame on them! All those freebies, jobs for the boys, jobs for the constituency etc. Shame on them! http://mazzun.wordpress.com/2011/06/28/l-air-malta-tezor-nazzjonali-li-serquh-il-politikanti-taghna/

Paul Sammut •

@not amused. The history of the balance sheets speak for itself. With all it's faults AirMalta was capable of making sound profits while also supporting the livelihood of its employees. It was when top management, directed by the policy of the major shareholder (sic. the money no-problem administrations) started making the wrong decisions that the company started making losses. Air Malta success or failure depends on the direction it is given by the governing administration. Even today, we see the present administration doing away with Maltese professional because someone wannabe wizz kid considers them as just so many cwiec Maltin. The story is getting to be too similar to that of MDD where foreign consultants (mhux xi cuc Malti) were brought in to drive the company into the ground. However, this time round the people know better.

Mario Pace •

Don't you know that Mr.Mizzi is Maltese...so according to Minister Fenech he is a "Cuc Malta"!!!!!!

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@GYK Most certainly not as both parties left their mark on our national airline. What I cannot understand is why you claim that this formula was the reason behind Air Malta's success. If that was the case than why the dilemma facing the airline today. You tend to take a very simplistic approach to the whole situation by lumping the problem squarely on the actions of the present administration but basically it has always been status quo from day one. In fact the management of the present day airline mostly originated from the labour era. Air Malta's problem has a very long history and no amount of smooth talking from either party is ever going to change that, least of all from Mr. Albert Mizzi.

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U xi nghidu dwar il-catering ta l-airmalta , nahseb hemm bzonn ta rivizjoni tal-kuntratt urgenti , il-livell waqa u qatt ma kien ta livell tal-kumpanija ta qabel.

Paul Sammut •

@ not amused, Did the jobs for votes situation ever change during the past 24 or so years of PN administratrion? No. The fact remains that in spite of all the high staffing, the management by cwiec Maltin and the negative ghasafar tac-comb propaganda from Eddie & Co, Air Malta was a success story and kept making profits and more profits and filling the Maltese coffers. Air Malta met its objectives hands down: Employment, Service to Maltese tourism and production industries and profits making. If as said, that success is attributed to 'screwed management' then it wouldn't be a bad idea if the Finance Minister gets hold of some of it.

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Staffing at Air Malta during Mr Mizzi's times was as high or higher than today while the market situation then was a completely different one altogether. The jobs for votes trend was very much in evidence during his chairmanship and this matter was never an issue. If this extra ballast contributed to losses or reduced profits, this is in principle, one and the same thing. The autocratic albeit schrewd management style of Mr Mizzi is well known and Air Malta was simply a conduit to satisfy that crave for authority & power. People in Glass houses shouldn't throw stones, least of all the ones who helped built them

Paul Sammut •

Briffy hist the nail smack on its head when he reminds us that Dom Mintoff preferred to have a clever politically blue boy who could do the job than several reds who were just dead wood and were simply in office because their party was in government, which is exactly the opposite of what our remarkable Cuc Tal-Biki minister is doing. If only George Bonello Dupuis were still around, may God rest his soul!

Micheal Bonanno •

@briffy. Coming from you, it's the best certificate that you can give to Mintoff. Again, I agree with you here. And you yourself are accepting the fact, that under Mintoff there weren't only jobs for the red-eyed boys, but even for the blues, unlike today.

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I appeal to Minister Fenech to rope in Albert Mizzi. He used to be known as Mr Fixit way back in the 1970s and 80s. Mintoff had a knack for choosing the right people for the job, he didn't care about their political beliefs. If they were good and delivered the goods then they were given the job. Mintoff was pragmatic. He used to say that it's better to have a clever blue-eyed boy who can do the job and is prepared to do it, than a hundred reds who are dead wood and are not prepared to do anything simply because their party wa in government.

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There is only one solution for one and all: THIS GOVERNMENT MUST GO!

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We can all thank the incompetents appointed and anointed by various PN Governments who were instrumental in bringing Air Malta to this dire situation, such as the RJ70's saga, including the eu that had dictated that Air Malta had to shed everything not strictly connected with its flying operations. Thus Air Malta had to give away the various hotels, its own catering company and give catering to a contractor and various other operations that were instrumental in increasing its income and lowering its expenses. The giving away of MIA, our only airport to a foreign company, again as ordered by the eu meant that Air Malta had to pay the grossly increased charges to a foreign company, a total of $150 MILLION since MIA was given to the Austrian company. I hope that the next Labour Government revises all contracts and re-nationalize all entities given to foreign companies and disregard the eu and its diktat. The Air Malta employees should and must remember that it was the PN Governments and the eu that are destroying their employment and the income of their families. This should also be remembered by every person who lost his job since we became members and all should strive to leave the eu which is collapsing before it buries us under its rubble and we end up pennyless. As a matter of interest, this morning it is reported on the EUobserver news in brief http://euobserver.com/ that the German ex-finance minister Peer Steinbrueck has told Cicero Magazine that Greek default is unavoidable and "We should no longer talk about the "if" of restructuring and rather just the "how"...I simply don't understand the wait-and-see attitude of the German coalition."

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lil AM fenech tal madonna ma jatix kasu ghax dan CUC MALTI.

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Air Malta under Albert Mizzi never made a penny loss.It has assets, like planes, hotels, travel agencies etc. But the govt. doesn;t look al Mizzi as a potential advisor with a weath of excpierence , because Mizzi was a Mintoff coloborator. Air Malta will have a big dive down, with all the new charges and loss of profitable roots. You will save business not only on cost cutting but creating onter initiatives. But if this comes from a cuc Malti will not be good. Mark time and one day our new CEO and Co. will vanish from Malta with a Ryanair flight.

Micheal Bonanno •

@Briffy. I concur heartily with you for once. But where were you when AM was managing the newly-born national airline, and your part kept harping that they are "ghasafar tac-comb" and even boycotted the airline? Now it has come from the horse's mouth that the government new of the company's decline and did nothing to help it. The reason behind it all is that it is Mintoff's child, and anything coming from Mintoff and his government is to be knocked off as happened to other corporations and companies.

Isabelle Borg •

Very valid comments from a 'cucc' Malti. Please take note Mr. Fenec

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I would rope Albert Mizzi in as a consultant at this crucial hour. He knows a lot about AirMalta, he was the father of AirMalta and AirMalta did very well when he was at the helm. Granted that times have changed, but AM is far from a fossil; he has kept with the times. He is a shrewd businessman besides. He has a pragmatic approach and I strongly belief that his services as a consultant should be tapped to help AirMalta to survive.

duncan abela •

Very measured and valid comments by Albert Mizzi. One of the most realistic assessments by one of our shrewdest entrepreneurs. The chance of a successful reengineering of Air Malta would be more likely to succeed if unions and politicians keep a step back and let hard business sense prevail and drive the recovery.