Issue link: https://maltatoday.uberflip.com/i/204636
7 News maltatoday, SUNDAY, 3 NOVEMBER 2013 next for Air Malta? "I'm not going to plaster the airplanes with tacky adverts. I don't think it's the image Air Malta wants to portray" have to admire them – every single scrap is investigated and reduced. And I think we can learn a lot from the low-cost industry, which is why we have to take all the advantages that they have created. But we will never get it down to that. I'd love to think we could get more productivity from our people." But it's true that the irony of lowcost aviation is that the phenomenon of flying to so called 'underserved routes' is made possible through tax money financing lower landing fees, even while LCCs like Ryanair reap the gigantic profits of these economies of scale. Davies says he doesn't blame the government for welcoming any airline that brings in more tourists, but he says that Air Malta cannot afford to keep its eyes down to what's happening in the industry. "If we don't drive costs down, there will be serious consequences," he says, mentioning a list of some 15 European airlines bleeding money and demanding state subsidies – while in the Gulf, Emirates is considering a $30 billion order to double its fleet of A380 superjumbos, suggesting that the centre of travel is converging on a point where the world's major cities are all 15 hours away. "I implore to everyone in the company: we must drive our costs down, and we have to appeal to [pilots' union] ALPA and the union of cabin crew that we must drive down costs," Davies says as we broach the subject of unions. But the truth is that Davies and the airline's main unions remain at loggerheads. The union says Air Malta needs more pilots, but that's surely not on the agenda – if anything Davies wants to see pilots fly more hours and cabin crew effecting the cost-cutting turnarounds Air Malta would benefit from. And that means overcoming a collective agreement that safeguards some handsome benefits (a recent MaltaToday exposé of a €750 penalty that is paid to every single pilot for cancelled leave riled the union) – not to mention the fact that ALPA resents Davies. "I think there are opportunities for ALPA and UCC to play a more effective role. I'm not saying they don't – they do a great job. But I think they have to take a look at themselves in the mirror. Everyone has a big responsibility, and they are important people… and they should look at their own consciences, and see how they can make a difference." Then there is the complex business of pricing. You must either snap Davies says he is motivated by the prospect of Air Malta servicing routes that can bring new tourists – Chinese, Indian and Filipino middle-income travellers – through Middle East gateways up Air Malta's cheap seats months ahead, or expect to be charged at prices double those of Ryanair. And that includes the fact, Davies then points out, that Air Malta's new fuel hedging policy has it buying fuel at $935 per metric tonne, far cheaper than Ryanair's $980. "So when the cost that represents 30% of your costs is less than the competition's, and they are still flying at half our costs… that's down to productivity." So – is stripped-down low cost the only way to go? "I'm not going to plaster the airplanes with tacky adverts. I don't think it's the image Air Malta wants to portray because that's not the image Malta wants to portray. It's not a tacky destination. It's a sophisticated, elegant destination that commands a certain price premium. And a lot of people will feel comfortable travelling on Air Malta, and a lot of people are happy jumping aboard Ryanair." Davies says he has no problem with competition. "But the biggest competition to Air Malta can be Air Malta itself," he remarks, as we get back on the subject of unions. "The point we have to make with the unions is that we have no God-given right to survive as an airline if we don't do our best. I ask people why Air Malta should be any different and there is no answer." Davies says he is motivated by the prospect of Air Malta servicing routes that can bring new tourists – Chinese, Indian and Filipino middle-income travellers – through such Middle East gateways. He suggests that this global opportunity is Air Malta's next frontier, even though it will require "stamina and vision" to bring about. He also mentions the opportunity to have Malta become a central distribution point for cargo airlines. And a future with some sort of strategic partner in the airline seems to be a question of not if, but when. "I won't comment on buying stakes in the airline, that's not my call. All I can say is that you don't have to be very clever to see that China is becoming one of the most significant industrial and commercial forces in the world," he says when I mention the part-privatisation of Enemalta as an example of new capital being brought into the country's industries. "The previous chairman [Louis Farrugia] said we would require capital injection. Where it comes from is not for me to speculate upon. But from a business point of view, that will inevitably have to happen." Davies knows that by 2014, he will look back at an airline that he strengthened with new foundations. But his words suggest that there is some finality in this journey, and that an end-point might be in view. "As far as I'm concerned, I would have done my job up to that point. I would have got a new board of direc- tors and a new government, and presumably a new CEO… but we would have created a better base, a better chassis, that gives the airline better foundations as I'm leaving than when I found it."