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Interview with Peter Bolech, CEO, Malta International Airport, who talks about low-cost flights, Malta’s tourism competitors and the schengen commitments Managing an airport is not an easy business. You get the flak from all sides, some complain that charges are too high, others want more services, everyone’s in a hurry. Peter Bolech is a no nonsense CEO who appreciates Malta’s importance as a cultural destination and he continues to do his very level best to bring MIA up to the levels which will please its customers and its shareholders, amongst which one must include the government who still retains a 20 per cent stake in the company.
 Recently, some tourism operators stuck their neck out and claimed that government should never have privatised the airport. But what would have been the scenario had this had not happened in pour island economy?
“This over simplification in believing that an airport organization can continue to be used as a bottomless pit or treasure box to give out money is simply untrue. First of all, the tariffs that we charge five years after privatization are still less than the airport used to charge before privatisation as these are calculated as 0.5 percentage points less than the increase in inflation, so in real terms we are still cheaper. That’s apart from the fact that we arrive at our charge increase after a review by an independent board of airline representatives. Secondly the illusion that somebody can continue running the airport at a heavy loss and continue to attract new airlines without covering costs is also impossible as this would mean that state aid would be needed and under EU rules, this is not possible. Malta has actually benefited from privatization as more airlines have come to the island through MIA’s marketing efforts apart from new revenue streams which have increased the government’s dividend in the past years. If privatisation had not occurred, there would have been less income for the country and that’s to put it simply”.
MIA are also criticised for having high tariffs especially by low cost airlines. But are charges really too high when low cost carriers are still flocking to the island in considerable numbers? Do they want something for nothing?
“It seems that in Malta there is the perception that all of Malta benefits from incoming tourism except the government and MIA who should provide access for free. I can’t understand how this mentality continues to prevail and it would be great if this could happen but unfortunately that’s not the way life works. We began with an offer that for every new route to under served markets, we were ready to give 50 per cent discount on our published charges. However, we were informed that this was not enough to bring new routes to Malta as airport charges make up only 5 per cent of the total costs of a carrier to bring new routes to Malta. So the government had to come in with incentives and I’m happy to say that this has brought a number of low cost airlines to the country, although when the rumour that airport costs are too high is circulated, you can see that the facts are rather different”.
How does Bolech react to the criticism formerly levelled by tourism operators of a lack of accessibility and is it the product that is actually the problem?
“We are going through an interesting phenomenon now as up to a year ago, everyone was talking accessibility but now that the problem has been solved, we hear silence. For example in May, we have 15 per cent more flights than we had in the same month last year with a corresponding increase of 20 per cent in passenger capacity, however there has been only a 5 per cent increase in actual passengers. The island has been opened up to new markets, Bologna and Pisa in Italy, Barcelona in Spain, Bremen in Germany and others but still, passenger numbers have not increased substantially. So there must be something else which is going wrong. Firstly you have the product, secondly how the product is sold and the third is accessibility. We seem to have solved the accessibility problem so it must have something to do with the product and how it is promoted especially with the Brand Malta exercise which unfortunately did not produce the desired results.
Is Malta really so unknown in destination markets, however?
“There are so many islands in the Mediterranean and so many destinations which have become attractive that Malta has a problem, both with its product and with the perception of it. We have to admit that there are some obvious shortcomings in the product as with everyone focused on the accessibility issue, we thought that the product problem would solve itself. Unfortunately, this has not been the case and we cannot really repeat what has already been said hundreds of times. Those who are actually selling Malta abroad still have a great responsibility and the marketing issue remains of paramount importance”.
What about MIA’s performance so far this year and what are the plans till the end of the year?
“We were very cautious in our forecasts with the winter months quite good showing an increase of 7 per cent and in March we actually posted a 10 per cent increase. However in the summer months we have forecasted an increase of around 5 per cent as the tour operator market is still suffering some problems. With the new Barcelona route, we also hope to see a long awaited increase of passengers from Spain although I would liked to have had the Madrid catchment area also included. We are also hoping for increase in trade relations between Malta and Catalunya that will definitely bring about more passengers and business to the island. It looks like the airlink problem has now been solved and we can look forward to a pretty stable 5 per cent increase in the summer months. Additionally there is the new daily Lufthansa flight to Frankfurt which also looks as a good opportunity although work has to be done to fill this flight to capacity”.
Although, he is cautiously confident for summer, Bolech is rather less optimistic about winter forecasts.
“It is difficult to actually forecast the figures as we don’t have access to our client’s figures but from the feedback we are getting, especially from industry players, there are still aren’t enough numbers who are interested in coming to Malta during the shoulder months”.
MIA is shortly expected to inaugurate its Schengen compliant departure lounge within the coming days. What is to be expected in this new feature?
“We have now complied with the Schengen requirements to separate Schengen and non-Schengen passengers and MIA was ready by April 2007 according to plan. We also have a number of new gates so if in any case, the Schengen separation does not work, we still have a feeling of spaciousness. Additionally we have also spruced up the airport considerably so that it’s not just glass and steel like in foreign airports where you feel slightly lost and out of place with all that’s going on”.
Is Bolech concerned about competition?
“We still have to maximise Malta’s potential during the shoulder months as the facilities here, especially in the 5-star market are quite excellent. With today’s new trends of shorter stays, Malta has a lot to offer and with this shift in tourism patterns, there is really a lot which can be done. Additionally, the country has a lot to offer, especially on the cultural side with wonderful pre-historic temples and other unique themes that the country has. If you have a wonderful painting, you don’t hang it frameless in your basement but display it in a most prominent place for all to see. This is, I feel what is happening with our prehistoric temples which are a bit like those frameless paintings”. |
