Issue link: https://maltatoday.uberflip.com/i/1503087
maltatoday | SUNDAY • 2 JULY 2023 8 INTERVIEW Raphael Vassallo rvassallo@mediatoday.com.mt 'Look at the bigger picture' Let me start with a question about Air Malta. There seems to be some confusion on the subject. A few weeks ago, CEO David Curmi gave comments to The Times, to the effect that the European Commission had denied – or was about to deny – Malta's request for State aid approval. But Finance Minis- ter Clyde Caruana has since argued that no final decision has actually been taken, at Commission level. Interesting- ly, however, we haven't heard the Commission's say, in the matter... That's because there is no 'final say', as yet. Basically, Malta has for a number of years now – I can't remember exactly how of- ten – been submitting requests to be able to provide State aid to the national airline. And it's still awaiting a reply, to its last one, from the DG Competition: the directorate-general that is re- sponsible for assessing State aid requests. The latest information we have, up until last Friday [23 June], is that Malta is still await- ing a reply. And in fact, Malta was asked to provide further informa- tion, a few days back. Meanwhile it has been report- ed that, by December of this year, Air Malta will be offi- cially replaced by an airline 'run on commercial lines'. Are we to understand, then, that those reports were mis- informed... i.e., that there is still a chance, after all, that Air Malta will continue to exist after January 2024? I cannot comment on what the Maltese government intends to do. What I can say is that, so far, the process is still ongoing. If the Maltese government is planning on an 'Option B', for example: at the moment, that is something we do not know. It is the prerog- ative of the Maltese government. What we do know, however, is that Malta has requested State aid. It has done so before; and the European Commission has approved Malta's requests, on a number of occasions in the past. Unfortunately, however, the re- structuring that took place after those requests was not sufficient to save the national airline, up until now: at least, from the in- dications that we have at pres- ent. So, we'll have to see what the Commission will decide this time, on the latest request. Meanwhile, there have been two recent European Court of Justice rulings against the Commission, for approving State aid to other European airlines: namely, Lufthansa (Germany) and SAS (Sweden). Does this have a bearing on the Malta decision? I don't know the specifics of those cases. But what I can tell you is that the EU's regulations on State aid, are there to guar- antee a level playing field when it comes to certain industries: preventing governments from constantly pumping taxpayers' money into these industries - air- lines being one of them – there- by distorting the playing field, to create an unfair advantage for certain companies. So obviously, if there were ECJ rulings, I'm sure that the Commission will be tak- ing them into consideration. But there are occasions where some people confuse [the EU's State aid regulations]. For ex- ample: states ARE allowed, un- der the regulations, to provide certain incentives to airlines. And when it comes to low-cost airlines, I think this has been the model across the European continent. That's why there is a proliferation of low-cost airlines at the moment, which has proven to be successful. This can range from incentives or promotions to the airlines themselves; or else, assistance to airports operating in low-capacity destinations, to at- tract different airlines. So, in this case, we have to dis- tinguish between incentives that governments are allowed to offer to airlines; and State aid... which is basically 'subsidies'. But the argument in Air Mal- ta's case – consistently made by different administrations of government - has always been about the airline's stra- tegic importance, in a small, peripheral EU member state. Air Malta provides services to the nation (including in the medical sector) which no low- cost airline can be expected to provide. Why, then, is the Commission always so reluc- tant, to accept the argument that 'Air Malta' is more than just a commercial airline? I don't want to sound like a bro- ken record, but – as I said before - we do not know the outcome of the assessment, as yet. And I'm sure that when the submis- sions were made by the Maltese government to request State aid, these considerations would have been placed in the argumenta- tion: especially because the regu- lations specifically state that there are certain preconditions that can help to favourably consider an application; like the remoteness, or periphery of the member state. Having said that - and I'm just thinking aloud, because obvi- ously, I am not the person who is doing the assessment – you also have to also look at the past. If Malta was allowed to provide State aid to its national airline, a number of times in the past; and restructuring had been promised, but did not result in a slimmer, or more financially sustainable air- line then the Commission would be bound to respect other prin- ciples in the regulations, which state that there cannot be unfair advantages being provided to any airline: not just Air Malta. In fact, this has been the history of a number of airlines across the continent where governments were barred from injecting tax- payers' money into their national airlines; and this led further to a change in the format of the air- line, for example. This is why I disagreed with your recent article – if I may – in which you compared 'State aid to Air Malta', with 'State aid to ST- Microelectronics'... Well, I got a lot of flak for that one anyway; so go right ahead... All I was going to say is that I don't think it's a like-with-like comparison. In the case of air- lines, there are very, very well-es- tablished regulations, when it comes to State aid. When it comes to 'microchips and semi- conductors', on the other hand... the scenario is different. Europe has fallen behind, when it comes Newly-appointed head of the European Commission's Malta Representation, LORENZO VELLA, urges critics of the EU (myself included) to 'appreciate the positives' that we have achieved, in 20 years of membership