Air Malta’s ‘achievement’ - Really?

Profitability alone, or even viability, should not be the main criterion to assess Air Malta’s performance or its very continuance to operate.  Our national airline is not just a trading company doing business transporting people and merchandise to and fro other countries in competition with other airlines and, consequently, subject entirely to the rules and regulations governing competition vis-à-vis other operators in the same market.  Certainly, no comparison with the defunct Malta Drydocks whose contribution was reckoned solely in its direct employment potential.

This appears precisely what the government failed to convince the E U Commission over a span of several months, with the continuous super-input of the outgoing Permanent Representative to it, currently described as exceptionally talented to a degree of indispensability.  So much so that, despite his inevitable resignation, the government pleaded with him to stay on until mid-July and then, conveniently, take over the chairmanship of the Bank of Valletta , thus perpetuating the ‘Edwardian’ school-tie connection which hamstrung it during the last 18 months, particularly by the arrogant bully-handling of investors in a number of its (mis)managed funds.

So much unnecessary damage has been inflicted on BoV that the last person to replace the outgoing chairman should be one of the same haughty ilk.  But obeisance has always been a characteristic feature of Nationalist administrations towards foreigners or locals with British ancestry.   When recently the Minister of Finance wanted merely to stress the impudence of pretentious people claiming suitability for responsible posts, he instinctively qualified it with the addition of ‘Maltese’ - “xi cuc Malti”.  A foreigner could never be a ‘cuc’!  No wonder foreigners always seem to dictate their terms when negotiating with Nationalist ministers.  As they clearly did in Air Malta’s case, camouflaged by ensuring that a figure-head chairman was a local.

Details of the Air Malta plan approved by the E U Commission have yet to emerge, most likely ‘leaked’ rather than published.  Of one thing we are already aware: a considerable reduction in operating capacity has been imposed as a basic condition.

Surrendering unprofitable routes makes sense if Air Malta’s mission was only its short-term viability like any other trading company, with medium-term profitability that would justify the nation’s financial investment in its capitalisation.  But, then, wouldn’t it become ripe for privatisation? Such is the nature of things with a Nationalist government that the profitable is sold, sometimes akin to being given away (e.g. Mid-Med Bank), whilst the heavy loss-makers retained as a fiscal drain (e.g. Enemalta).

Air Malta is the engine that propels at least half the tourist industry, which in turn propels at least one-fifth of our economy.  To further develop tourism our national airline needs to pioneer routes.  Apparently understood by all bar the E U Commission, these routes happen to be the unprofitable ones identified for axing so that the airline turns profitable - even if their economic benefits are positive and usually justifying the financial losses.

That is where the government’s negotiators failed.  And failed miserably in not distinguishing between all-important economic returns and less-important financial losses.  Typical GonziPN reasoning   - a new Parliament building, for instance, being more important than an equivalent investment in modernizing our roads, currently hardly worthy of a third-world country.

Is there still a way left to mitigate the economic pain from a restructured Air Malta that would not make the EU Commission wince?   Yes, there is.  But GonziPN would be too timid to try it out in case it irritates Brussels.   In any case, by the time it could be implemented, the general election would be over, with perchance a change in thinking.

It goes like this.  The Tourism Ministry would form a subsidiary specifically to negotiate with the airline the operation of ‘pioneer’ routes such that a minimum break-even status is guaranteed to it.  The subsidiary would assume all the marketing functions for these pioneer routes, initially encouraging outward rates for locals at very attractive prices Ryanair-style.  Any element of ‘state aid’ which could be perceived by Brussels being to the Ministry’s account, Brussels wouldn’t drag in any reference to competition issues in the knowledge that these routes will always stay open to other airlines to join in.  When this happens, the Ministry’s involvement will obviously end.

Wishful thinking?    Let the MHRA speak out.

Maynard