Our man of steel running Air Malta

Around the world, airlines, hotels and travel businesses are bracing for the return of tens of millions of tourists and their hundreds of billions of euros — though experts suggested the revival could take months to fully gather pace. Many are basing their hope of a revival in the Asian market. The lifting of quarantine rules effectively opens the door for many Chinese to go abroad for the first time since borders were slammed shut three years ago.

Can Malta stand to gain? It is blessed as one of the sunniest European destinations with a good climate all year round, making it an ideal location for a short getaway. Obviously, many have written to the tourism ministry to ensure a better upkeep and cleanliness level of touristic zones. Numbers are expected to reach three million visitors this year. It is pertinent to reflect how no official studies have ever surfaced over the years to discover the actual value added (GVA) that the sector contributes to the economy after deducting infrastructural costs, environmental damage, food and beverage costs and State subsidies to low-cost airlines.

Looking back to the origin of tourism in the early sixties, such a nascent tourist sector was warmly welcomed and supported by politicians as a pivotal means how to balance annual budgets and create lucrative jobs for hundreds of Illuminati with Air Malta.  As recently advised by DBRS (a rating agency) caution is in short supply as it reminds us how tourism can be a rather volatile industry.

Now that two years of pandemic shutdowns are over, the finance minister wants to catch up on lost revenue.  According to David Curmi, the Executive Chairman of Air Malta, the plan to dissolve Air Malta and open up a new Maltese carrier is in its final stages.  “We are nearing the end of long, difficult, and complex discussions with the European Commission, which did not want a photocopy of Air Malta”. In 2010, the Maltese government notified the EC that it wanted to grant a loan of €52 million to ensure the survival of Air Malta, with the commission approving the aid.

A year later, in May 2011, the government once again asked the EC to give permission to grant the flag carrier a capital injection of €130 million, which the EC eventually approved.  Under the current administration, government is requesting EU Commission to approve yet another tranche of €290 million - this time negotiations are tougher.

Apart from financial issues, one may ask - who can solve the mystery of recent delays faced by Air Malta on its flight schedules? No official reason was given by management to explain why the service has suffered so much degradation. Air Malta’s COO has attributed some of the recent flight delays to the shortage of aircraft being faced by the whole industry, caused by technical problems as a result of the length of time planes spent idle during the COVID-19 pandemic.

All this compounds the issue that one cannot rely on AirMalta with its under capitalized structure, chronic losses and having just eight leased aircraft at its disposal. Its bloated crew and pilots overhead have always been a reflection of political interference from those who pull strings from Castille. It is no secret that some 80 pilots currently enjoy a lucrative early retirement scheme, which will see them receive two-thirds of their salary over 10 years.

The finance minister said he plans to “stop this madness” and that he planned to offer pilots a one-time payment to terminate this controversial clause from their collective agreement. Certainly, the government will be forking out substantially more to buy out this clause. Sources reveal a similar package is to be offered to cabin crew which is expected to cost around €200,000 each. This will be offered to around 100 members of cabin crew. Those who take the offer will be bound to forfeit working within the public sector for six years.

Air Malta will fork out thousands in payments to pilots who retire in line with a collective agreement clause that government may ‘buy out’. The collective agreement clause states that individuals aged 55 or more, who have been pilots with the national airline for more than 25 years, would be paid two-thirds of their salary each month until they retire.  One recalls how Air Malta had sacked 69 pilots in 2020, after talks with the Airline Pilots Association broke down.

Speculation is high that the company will be wound up since many attempts failed to obtain approval from The Commission to inject state aid.  Quoting “The Shift News” it is reliably informed that a backup plan has been hatched on replacing the national airline with a properly funded national airline.

The finance minister hinted on discussions concerning the possibility that Air Malta could be replaced by another flag carrier, while with a smile insisted that the airline's restructuring programme is on track. In a cost cutting move, the airline has hived off baggage and ground handling services and started to drop unprofitable routes. Rumour mill has it that some employees will be transferred to civil service at same pay while others hit the jackpot landing generous severance pay-all costing almost €200 million.

On the bright side, prospects for tourism this year look good and provided Europe avoids the pangs of a mild recession, there is a feeling of so-called revenge tourism with millions of travellers still having unspent cash in the drawer, saved during two years of restrictions.

Three years ago, ex-prime minister Joseph Muscat was bullish about the tourism sector, projecting that soon we should start attracting rich tourists who spend up to €5,000 a night in super luxury hotels which government urge developers to build. Was he anticipating millionaire Asian visitors who are expected to flood Europe this year?

Notice the starting gun is about to be fired on the anticipation of building pristine hotel towers licensed to DB, the massive Villa Rosa complex, Mercury towers, Gap hotel, Comino bungalows and six luxury towers by Corinthia.  Such superlative investment is seed sown for quality visitors.

For this and other reasons, the man of steel navigating Air Malta needs all our trust and encouragement to safe land the legacy airline and sustain our tourism sector.