During the past decade, we have heard about 'globalisation' as much as we have heard about any leading jet-set brand name. It is true that there are diverse opinions about the effects of globalisation, but it is also true that it is here to stay.
People can try to influence its effects to increase its impact or to minimise its negative side-effects. For us Maltese, we are a drop in the ocean and it is useless to claim that we can influence the international economic order.
Therefore, we are more takers than anything else. There is little hope that we can become part of the movers and shakers, even if we are given any little voice within the European Union.
The most we can do is to maximise our size and adopt strategies that differentiate us from big countries. I guess there are several case studies that one can learn from in terms of development strategies adopted by small states.
Most of your readers would agree with the notion that society is dynamic and, hence, change becomes part of our lives. One of the recent changes that has been brought about by changes in lifestyle is that people want to travel more.
People travel to do business away from their national markets, to study abroad, attend international conferences, and also for leisure. In the latter market segment it is becoming more apparent that people want to travel more, but for short breaks.
Hence, I find little news in the statistical bulletin that tourists coming to Malta are taking shorter holidays in Malta. This is an international trend found in most of the tourism-related Websites or published data.
There is no doubt that this tourism phenomenon is being brought about by the arrival of low-cost airlines that offer to transport people from one destination to the other, even so through more frequent schedules.
When people travel, especially on short hauls of say a three-hour flight, they do not require a big meal, newspapers, magazines, duty free, sleeping couches, etc. They are looking for a safe journey from their country of origin to their country of destination. This is what low-cost airlines provide.
Once I was taught that for an economic analysis about the building of a bridge, one cannot take the crossings figure obtained from those using ferries. Ferries provide an additional danger for some that would be more than willing to travel on a bridge than use a sea ferry.
Thus the flow is much higher for a bridge than a sea ferry. This logical rule can be easily applied to low cost airlines, taking the low-cost fares as the positive contribution to an expanded demand for travelling.
Ryanair CEO Michael Cawley rightly expressed the principle in his letter as follows:
"Mr Matthias Merzhäuser's contention that Ryanair will have to poach business from charter airlines is completely wrong. Short-haul air travel is stimulated by price and is in economic terms an elastic product, i.e. its demand is inversely related to price, so as price is reduced demand substantially increases.
"This phenomenon has resulted in the dramatic increases in volumes across all routes in which Ryanair has commenced operations."
I fully support Mr Cawley's analysis of the air travel market and strongly believe that the operation of low cost airlines to and from Malta will make a positive contribution to our economic development and economic welfare.
Given our small economy, we have been basing our economic strategy on small quantities and higher prices. I think there is a new opportunity to begin to think in terms of big quantities and lower prices.
This is even more desirable when we cannot transform our country into a luxury destination. One: Government does not have the capacity and the funds required for such an ambitious project. Two: we have a strong NIMBY syndrome and any new initiative is deemed to be to the detriment of a locality or the environment (case in point: waste management, golf course, reclamation projects).
I do not know what Mr Merzhäuser's credentials are and why he is so keen on advising the local movers and shakers against low-cost airlines. My advice to him is to let the Maltese make their own assessment and devote his capacities to his own country, where there seems to be ample space where to use his entrepreneurial skills.
Finally, I call on all concerned to take effective measures to make Malta win back its competitiveness. For this to happen, as much as there is the need to reform our ports and harbours, there is also the need to reform our vision on how we can attract tourists to Malta, and the strategies that we need to endorse to make things happen now.
We need to think in terms of creating the cake in economic terms and then to ensure that we still have a human face and a social conscience to distribute the created wealth in a just and fair manner.