Selling Malta holidays in Russia

We refer to your report "Holiday Malta tries to increase share of Russian market" (January 9).

The total number of tourists from Russia and CIS states to Malta in 2004 was about 30,000. Of those, the estimated number sent by Holiday Malta (Russia) (HMR) is around 4,000 (not 80,000!). The remaining 26,000 are the sales of Russian tour operating companies, mostly covered by the undersigned.

Traditionally the net operator rates (accommodation and ground services) are quoted by ground handling agents in Malta to their partner operators in Russia. The Russian operators then contract airline seats for the season and form a package price that is further distributed among agents who sell, for a commission included in the price, to the end client.

HMR forms a net package inclusive of airline ticket, accommodation and ground services and gives the net package rate to their large operator-partners as well as to small agencies. By approaching small agencies with the net package rates HMR attracts more business but effectively undercuts both their own partners and other Russian tour operators. The situation at present is that any small agent who has a one-off client to Malta has access to net tour operator rates from HMR.

This is why the total number of Russian tourists to Malta in 2004 did not increase compared to 2003. HMR's aggressive policy partially redirected the flow of tourists to this company.

With regard to HMR's pricing policy, there is no doubt that Holiday Malta as a group is a profitable company. Its profitability may allow the company to cover possible losses of one of its branches, e.g. their Russian office. Otherwise we find it difficult to account for a difference of sometimes even up to 300 US dollars on selling package prices of certain hotels per week.

Is it the case that the hotels choose to quote the UK market rates (traditionally low) to HMR for Russian sales? Or is it simply because the hotels give HMR rates that are considerably lower than those quoted for years in a row to the Russian market, thus willingly earning less income that can be generated from this country? Maybe it is so, since the head of HMR's representative office in Moscow indicated in early December that many hotels had given HMR even cheaper rates for the coming season.

As to the issue of Air Malta's preferential policy towards its subsidiary, a senior Air Malta official invited the operators to send their individual grievances on the matter. When contacted on several occasions with specific examples and questions regarding unfair seat distribution this official failed to give any reply whatsoever. The correspondence took place in the shoulder months mentioned in the article, when the operators were unable to get extra seats and when Holiday Malta (Russia) Ltd "increased their capacity".

On numerous occasions since last spring we tried to reach a compromise both with Air Malta and with HMR. Unfortunately, all our appeals to HMR to abide by the terms of fair competition seem to have been in vain so far. Moreover, during a recent meeting in Moscow between Russian operators and HMR, the head of the company's representative office showed no interest in modifying his policy to ensure smooth and consistent development of the Maltese destination in this country.