Air Malta`s Olympic route

Maltastar

Air Malta`s Olympic route

May I share with you this quote I found in Bloomberg Financial News on 18th February spelling the problems with Olympic, the Greek National Airline.

Quote

Greece is renewing its attempt to sell Olympic after Sabena SA and Swissair stopped flying as losses worsened after passenger traffic dropped following Sept. 11 attacks on the US. The Greek government plans to eliminate jobs and implement other cost cutting measures to help attract a buyer.

The sole bidder, a venture between Greek millionaire Vardinayiannis and Olympic`s pilots association, that had offered to buy 51% of the airline after previous efforts to sell stake to British Airways` and Axon Airlines collapsed, failed to finance its 102 million euro offer by the set deadline.

Greece has tried several times over the past decade to turnaround Olympic as it spent more than $2 billion to keep the airline afloat. Each time it backtracked because of union opposition to cuts in staff and employee benefits. EU regulations prohibit further subsidies.

To become profitable the airline must eliminate many of its unprofitable routes and discharge half its staff. A succession of Greek governments has contributed to Olympic`s losses by forcing it to hire workers to win votes and giving labour unions a veto over some management decisions. It also mandated the opening and maintenance of unprofitable routes to Australia, South Africa and the US to serve the Greek communities in those countries, even though there aren`t enough passengers to make the routes profitable. Flights to smaller Greek islands and some European destinations are also unprofitable.

Unquote

This is a warning signal of what Air Malta will have to go through unless management pulls its act together and is allowed to the do so by government in the national interest irrespective of the blushes that may be suffered by the party in government.

Air Malta is a monument to the successful re-structuring carried out by Labour`s two governments of the seventies. People of my age well remember how we raised eyebrows in incredulity when Mintoff announced plans to launch a national airline to be manned by Maltese even in the cockpit.

Over the years Air Malta achieved its dual purpose to become a pillar of growth for Malta`s tourist industry and also to be profitable in its own right.

All this happened and was sustained with gradual healthy growth until the nationalist dreamt of a new role for Air Malta, that of becoming a regional operator with Malta as a hub for the region. It was a pipe dream project which loaded Air Malta with a equipment configurations based on the RJ`s totally unsuitable for Air Malta`s plain vanilla mission to sustain tourism. It also forced Air Malta to make a massive investment in an Italian regional airline` AZZURRA which has absorbed a lot of time, money and human resources but still have to discover what profitable operations are all about.

Add to this the political privileges which Air Malta has to dish out to please its political masters and inflexible union practices and you have an Olympic in the making.

With similar problems at Drydocks,` well known and publicised, and other much less known but still very serious problems at Gozo Channel / Gozo Ferries, Freeport , and` Water Services Corporation, we definitely can do without Air Malta becoming another` burden on the national coffer.

But this cannot happen purely by luck or prayer.` It needs an action plan.` It needs vision.` Above all it needs determination to stop playing games with the country`s prized assets which will force us` to privatise on the cheap when crisis eventually hits.

Air Malta needs to re-discover its mission of becoming an integral and structural part of Malta`s tourist industry and must shed off and cut losses in ventures which made it wander and lose focus under the nationalist administration.

And the tourist industry must re-invent itself to favour Air Malta`s development by re-positioning our product to attract short stay value added tourism. With short stay tourism we can get a much better spend per bed-night and given our bed-stock Air Malta could almost double its passenger kilometres simply by having 2 guests sleeping 3 days each` in a hotel bed in a week rather than one guest staying the whole week.

Unless we act I can well` see Air Malta going the Olympic route and there will be no medals to award, just pain and misery to share.

Alfred Mifsud