New Stansted route in the offing while Air Malta mulling less routes - Gulia

The shadow minister for tourism, Gavin Gulia has said that new routes for low-cost carriers in Malta were being negotiated while Air Malta was planning to shed some routes.

Gulia has called on government to reveal what tourism strategy the country would adopt and what its views are of the effects of low cost carriers on Air Malta’s future.

“Government must tell us if negotiations are underway with LCCs to open new routes to London Stansted as Air Malta is passing through its most critical moment in these 23 years’ [of government] leadership,” Gulia said.

“If this is the case government must say whether it has examined the effects of these decisions on tourism and the Air Malta restructuring, and whether Air Malta is now expected to reduce its operations towards vital destinations,” Gulia added.

Gulia said Labour’s priority when it comes to LCCs is that their routes should generate new passenger and not substitute existent routes that might have medium and long-term implications on Air Malta’s viability and the tourism industry.

“Government must explain whether Air Malta’s restructuring is independent and separate from ongoing negotiations between government, the Malta Tourism Authority and LCCs on new routes. We need a responsible coordination with the people responsible for Air Malta’s restructuring.”

The restructuring plan drawn up by Ernst & Young in December 2010 had underlined the presence of low-cost carriers as the main threat to Air Malta. LCCs enjoy subsidies from Maltese taxpayers thanks to the route-support scheme.

LCCs like Ryanair and Easyjet benefit from cheaper landing charges at Malta International Airport, because the government can ‘finance’ the charges for airlines that fly underserved routes and from regional airports. This year alone, the government increased the budget for ‘route development’ to €4.5 million.

Air Malta itself has found it impossible to apply for these same subsidies, explained a high-level official from the airline. “Ryanair and Easyjet have economies of scale that Air Malta doesn’t. For example, they make large orders for aircraft at better prices, pushing overall costs down. Air Malta’s business model doesn’t allow it such economies: it would still have a high cost per passenger, even under the route support scheme.”