26 July 2006

The Web
Business Today

Low cost negotiations “at critical stage”

As the summer season is slipping by, tourism operators are anxiously awaiting the results of government’s negotiations with low cost airlines on a new set of routes announced late last week.
According to industry sources, negotiations are “at a critical stage” although it remains unclear on how interested Ryanair will remain with the latest list of routes offered to Luton airport (UK), Northern Ireland, the Republic of Ireland, Pisa (Italy) and Mulhouse-Basel.
On the other hand Easyjet are said to be the most interested in the offers, although government gave until 25 August for airlines to make their offers.
The government’s scheme would provide for startup costs, route marketing and promotion of the route.
GRTU Deputy President Philip Fenech said that if taken, the routes would be “a start”.
“They will be taken up probably, but it would only be one step,” Fenech said. “It would still not generate enough volumes to get tourism and the rest of the economy going.” While tour operators estimate the potential millions lost in revenue caused by the delayed talks on low cost airlines, Fenech warns even the core markets remain underserved.
The Malta Hotels and Restaurants Association is also hopeful that the routes are taken by interested airlines and that they start operating as soon as possible.
“We have no feedback yet on the direction of negotiations, so we’ll have to wait until the end of the tendering period,” said MHRA Chief Executive George Schembri. “We have always said low cost carriers would be part of the solution, low cost are a trend that we have to embrace, not the solution to all our problems. We have to keep investing in the product, in marketing and branding.”
Schembri said it was clear the peak season would be over when the routes are finalised – in fact the government plans to have the routes operating at least by November.
“These kind of negotiations take a lot of time to conclude and you can’t really expect airlines to come overnight,” Schembri said. “We hope they start operating as quickly as possible; if they work in the winter season that would be a good help.”

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