Possible scheme to lure low cost airlines

The government is prepared to consider the creation of a "mechanism" to bridge the cost gap and entice low cost airlines to Malta, Tourism Minister Francis Zammit Dimech has said.

In conjunction with the Malta Tourism Authority and the tourism industry, the government is probing the possibility of setting up funding schemes that would encourage airlines to increase their presence in Malta, the minister said.

He would not, however, divulge any details, saying the government was awaiting further concrete proposals from Ryanair this week.

Low cost airline Ryanair has expressed its willingness to link Malta to no fewer than 26 destinations but is reluctant to take off before Malta International Airport reduces its "expensive" rates.

"Despite the difficulties, we're not giving up on Malta... yet," Ryanair's chief operating officer Michael Cawley told The Times yesterday.

However, the airline would have to omit Malta from its 2006 plans if no agreement is reached within the next four weeks.

Ryanair has promised to fly two million passengers to the island within four years and base six aircraft here in return for a long-term, low cost deal which the airline claims would "save" Malta's tourism. The airline is so optimistic of the success of the Malta route it is prepared to reimburse any concessions granted if it fails to deliver the number of passengers it is promising.

But Ryanair estimates it would cost it e25 per passenger to operate to Malta at current rates - a figure made up of airport and handling charges, plus government-related security costs.

MIA's discounted offer of e19 to all airlines to certain destinations is still a "non starter" for Ryanair, which says that most other airports it is operating to are charging just €7.50.

"We're going to give it our best shot but we believe anything over €7.50 is over the market price. Malta needs to get its head around to embrace the concept of low cost airlines," Mr Cawley said.

He urged the government to take the cue and come up with incentives that would bridge the gap between the airport costs and the prices the airlines are prepared to pay.

"Though MIA is a private monopoly, the government always wields the ultimate power and I know the government is willing to help," he said.

The government, Mr Cawley said, may freeze any cost increases and introduce schemes for airlines to fly more passengers, the way it had done with the tour operator scheme but still keeping in line with EU regulations.

The tour operator scheme had given the British a preferential exchange rate but had fallen foul of EU rules on state aid.

"The key issue ultimately is that a private monopoly will take decisions in the interest of its shareholders and not the country. Maltese welfare and tourism is secondary to MIA," he charged.

Still, Mr Cawley said that MIA did not realise that its revenue could shoot up even if it reduced its charges.

The fact that Malta had only one airport should be no excuse for inflated prices, Mr Cawley said. Ryanair flew to Gatwick, Manchester and Ciampino - certainly no small airports by any stretch of the imagination.

"Size doesn't make an airport expensive - lack of efficiency does."

Malta, he said, should take a good look around itself and wonder why its tourism was suffering while other less attractive destinations were boosting their tourism figures.

Ryanair, he said, was currently holding talks with 20 airports around Europe, which realised that low cost travel was the way forward.

In an interview last week, MIA's chief executive officer Peter Bolech described the landing charges in Malta as very competitive, to the extent that renting a small car in Malta for a week was more expensive than landing a Boeing 737 airliner.

"This is why we sometimes find it difficult to understand the public perception that MIA's high charges prevent these airlines from flying to Malta," Mr Bolech told The Times.