It was fiendishly difficult to book my return flight to Malta last month. It was my fault, of course. First, I chose the wrong dates. I mean, there was nothing wrong with the dates per se. It was just that planes to Malta don’t fly that regularly anymore. A growing count of European cities doesn’t provide direct connections anymore. Major hubs, like London, stopped to offer flights on a daily basis. Instead of half a dozen flights per day to pick from, one has to pick the right day nowadays.
My booking difficulties were aggravated by my stubborn insistence to fly Air Malta. While I was fiddling with my route planning, I remembered that I still had some unspent ticket vouchers I’d thought to utilise. This was my cardinal error. Online booking with Air Malta’s website does not allow to apply vouchers, like BA’s for instance.
You have to call them up. The few hundred admin people handling queries and bookings in KM’s back office are quick to pick up the phone, impeccably polite and willing to spend any time on earth with you to find out how paying with a voucher could best be accomplished. The young men and women, keen to help under difficult circumstances, took turns putting me on hold, transferring me, to finally come up with a solution. They would transfer my query to the voucher team! “Be assured,” they comforted me; “within the next 36 hours, someone will call you back.”
And sure they did. The next day, while I was in the bathroom, I heard the long-awaited return call. I tried my utmost to pick up the phone in time, alas, under the circumstances, I was too late. The landline which rang me was the analogue equivalent of a do-not-reply-e-mail. Officially the number did not exist. All my attempts to return the call were therefore doomed to fail.
A few hours later, I received a non-reply@airmalta.com e-mail with good news. My booking had been processed, my vouchers accepted, but as ticket prices had doubled in times of COVID, I would have to call them up latest by 2pm the next day to pay the difference of €258.19.
The young man who took down my card details could neither tell if my payment was accepted, nor when a ticket would be issued. “I just pass on your data, you know. Payment will be processed by the reservations team. You will get a confirmation from them. As a rule within the next three working days.” “But I am flying tomorrow. Perhaps you better connect me with them?” “No, this is impossible, sir. They are too busy.” Feeling my distress, the young man tried to lift my spirits. “I cannot promise anything,” he tried to console me, “but perhaps they make it faster in your case.”
And sure they did. Only a few hours later, I had my tickets. Just in time to fill out my passenger location and health declaration forms and to check in.
As the late English historian C. N. Parkinson had observed in his famous, satirical book Parkinson’s Law (1957), “work expands so as to fill the time available for its completion”.
This meant, in my case, two days times 10 people at Air Malta. This is not to belittle the army of brave, young men and women who try to tackle an ever-growing mountain of refund claims (€30 million at the last count) and voucher handling requests (€12 million). These poor Kafkaesque souls, wielding their abacuses, do a job that nobody should do in the first place. For this, we have in the 21st-century software and computer power which does not involve humans at all.
At BA, not a very successful legacy airline either, the same task takes a few minutes – of my own time, clicking along an idiot-proof website. The main reason of course for all these hundreds of back-office workers and baggage handlers, hired to administer seven planes, is Malta’s patronage system: ask a politician for a job and there was a good chance in the last 50 years that you will end up at Air Malta.
The main reason for all these hundreds of back office workers and baggage handlers is Malta’s patronage system- Andreas Weitzer
After 16 years of losses to the tune of a few hundred million euros, the government running the airline has a plan. A new plan. After having injected €130 million in 2012 which evaporated in thin air, it asked the European Commission whether it could throw in another €290 million. But the government was only kidding. They knew that the EU would say no.
Therefore, Finance Minister Clyde Caruana – in the footsteps of visionary Konrad Mizzi – now has the ultimate rescue plan. Transfer more than half of Air Malta’s employees together with their abacuses into other government jobs and cancel half of the losses by cancelling half of the flights, loss-making as they all are. Ground handling will be handled by the same people but employed by another government firm.
The haemorrhage will continue, smaller in total, but larger per passenger seat. While Ryanair showed a net income of €225 million in Q3 2021, with profit margins of 12.61 per cent, my favourite airline has only losses to show for. €170,000 per day.
Malta Air, the Ryanair joint venture with the previous Maltese government, has now 142 planes attributed to Malta. Of course, these planes never fly in an out of Malta, at least only very few of them. It is the equivalent of Malta-registered vessels. Retrospectively, it would have been more profitable to ask Ryanair to don the Maltese cross, call itself Air Malta, and pay royalties for the distinct brand. The sale of my beloved carrier would have been a blow, but certainly cheaper for the taxpayer. After Vitals Global Healthcare, university and windfarm investments, a saving.
Airlines are a tricky play for us retail investors. It is a bet on growing tourism and falling fuel costs, as one-third of the total operational cost of an airline is fuel expenditure. Crude oil prices have now almost doubled in the last year. Business travel, the lion’s share of income for legacy carriers, does not look to return to its former glory. Conference calls are cheaper, and environmentally friendlier.
Tourism, which has dropped 72 per cent worldwide in 2020, has recovered slightly, by 19 per cent last year. This leaves us still with a drop of 66 per cent when compared to 2019. The UN’s World Tourism Organisation does not expect a recovery before 2024.
This is very bad for Malta’s budget tourism and does not bode well for Air Malta too. While our airline is in cost-cutting mode, Wizz Air has ordered 102 new Airbus jets. A bold bet on future travel, and the cost-efficiency which comes with newer planes, larger fleets, and less staff per traveller. There’s a lot of pent-up demand for travel. We all want to smell freedom again.
My own, statistically insignificant, experience tells me that ticket prices in the last half-year must have at least doubled, propped up by fewer flights and limited competition. Which means those airlines still invested in the business could be profitable even with spare capacity. But investing in airlines, even the best-managed, remains a leveraged bet on the ebbing of the pandemic, invigorated pricing power and a moderation of fuel costs. A risky wager.
The purpose of this column is to broaden readers’ general financial knowledge and it should not be interpreted as presenting investment advice, or advice on the buying and selling of financial products.
andreas.weitzer@timesofmalta.com