Ryanair’s €5 Gambit

Ryanair’s inauguration of its latest flight out of Malta is in the news today (Malta-Trapani). Also in the news was Ryanair’s increible offer of one million seats at €5. People still question whether this policy of Ryanair’s is reasonable (not sure there). They also wonder whether Ryanair should be more clear about the fact that €5 does not include taxes and whatsnot (they should). Commenting on an online newspaper someone also commented:

By no stretch of the imagination can the € 5 cover all the Government and Airport Taxes. This goes to show that Ryanair is being aided and abetted to act in breach of competition laws and being given an unfair advantage over legacy carriers like Air Malta who have to collect and pay Government and Airport taxes making their air fares artificially inflated.

The usual rant you would say. His is not the full picture though. Ryanair’s is a commercial gamble – it has not got much to do with breach of competition of laws as it has with the defiance of costs, supply and demand. To an ignoramus like me the reason Ryanair can afford cheap flights is precisely because it cannot. Nobody can really. They are underpriced because Ryanair is gambling on slicing into huge parts of the market. It tries to get customers dependent on the “cheap” idea then runs up the ‘collateral damage’ – or extra costs.

There’s the amount of luggage, the weight of the luggage, the price of food on board, the transport to and from the airports of choice and more. Contrary to popular perception, Ryanair is not “doing well”. Rather it’s recent losses inspired newspaper titles such as “Ryanair got it wrong”. Their Shannon base in Ireland is about to have 400 jobs cut off in order to minimise losses.

The latest setback for Ryanair was during negotiations to order 400 new planes. It tried the usual tactic of bullying with numbers trying to provoke a price war between Airbus and Boeing. Airbus’ answer was simply:

We are not in discussions with Ryanair about aircraft. That is on the record. We don’t have plans to enter a sales campaign with Ryanair, which would be very expensive and very time-consuming.

Clearly Airbus sees this as nothing more than a ploy to negotiate with Boeing, and acknowledging Ryanair was likely never going to place an order with the company. The outlook is not so bad for the airline of the Harp. Despite gross incompetence over the past year with regard to hedging contracts for the price of fuel Ryanair is expected to recover though their plan for transatlantic flights might have to be shelved for now.

Next time you are on a Ryanair flight with your knees rammed firmly into the neck of the passenger seated in front of you do bear in mind that your “cheap” trip is a result of a gambit that relies on numbers, numbers and more numbers.  When you realise that the costs for your flight plus collaterals cost you much more than that €5 ad you saw don’t complain… just go “baaaaa”

After all the choice is yours… and that’s what matters really.

Reading Governmentspeak: Departure Tax

Minister Tonio Fenech has confirmed that the much loved departure tax will be removed as of November 1st 2008. Good news and a good start for many. J’accuse cannot comment on the Government’s opinion on whether the Commission is right or wrong when it says that the tax is a barrier to movement due to work obligations. What we can do is take a look at the words of Minister Tonio Fenech and see what they really mean when we remove the MLPN reasoning. Here’s a quote from today’s Indy:

Investment, Economy and Finance Minister Tonio Fenech yesterday confirmed that the legal notice abolishing the departure taxv will be issued next week meaning Maltese passengers will no longer have to pay it from 1 November. During a press conference held after a visit to Air Malta offices during which he met the new board members, Mr Fenech said that the e23/Lm10 departure tax, which had been introduced in 1997 under a Labour government, will be removed. The minister said that the government is implementing an electoral promise.

He explained that the departure tax will be removed in November for two reasons. Firstly because new fares and holiday bundles will be offered during that period and it did not make sense to introduce it earlier. Secondly, thanks to the government’s sound financial policy and the country’s stable economy, “unneeded” taxes can be removed. Referring to the initiated EU infringement procedures against Malta over the departure tax, Mr Fenech said the government did not agree with the EU’s stance and pointed out that the tax certainly did not hold back the Maltese from going abroad.

That is what he said. This is what he wants us to believe and what J’accuse thinks the reasonable vote should actually be reading.

1. Departure Tax is off the books from 1 November: Fenech is telling us that the government is taking a positive responsible action and even has a plan when to put it in place. What he does not tell us is that without the Commission breathing down his back (even if we are not sure that it is right) we would still be lumped with the Departure Tax. This is not a government planned decision. It is not a move to improve travel conditions. It is a knee-jerk reaction that cannot be delayed any longer.

2. Introduced by the Labour government in 1997: Of course it was. Who else would introduce such a ridiculous tax that reduces our competitiveness in the travel industry and disincentivises Maltese travellers (and was more expensive until a while ago)? Who other than those bumbling gits under Sant? Give us a break Tonio. Do you need reminding that you have trumpeted Sant’s government’s amazing collapse in 1998 all over the place – while saying that one of the reasons was Sant’s fetish for raising taxes? So tell me Tonio, has time flown so fast since 1998 for you not to notice that the PN has been in government for 10 years with that tax in place? Who cares if the Labour government mothered it? You seem to have milked it for as long as you could – not convincing at all.

3. Why they introduced it in November: And now for the bollocks. It was not reasonable to effect summer holiday packages and bundles – it was more reasonable to wait till November for the new fares. Tell it to the customers and families of four who would have saved e100 on their trip abroad this summer. Ask them what they would have considered more reasonable Tonio. For crying out loud.

4. The stable economy: Oil crisis? What oil crisis? Rising food prices? Where? The nationalist spin right now requires that whenever it is possible people are told that our country has a stable economy. Of course we are not living under crazy management systems of old but then again a modicum of moderation about this feel-good factor is to be expected from a responsible government. The Economist, the FT, all are criticising the efforts of governments to count on the trickle down effect in the hope to counter the slumping world econonomy. Citizen responsibilisation forms part of one of the means of tackling the current problem. No Tonio. You are not removing the tax because you can afford it – you are removing it because you cannot afford to keep it – and I am not talking economy there.

In sum, a tax that in my opinion (even independently of legal considerations*) should never have existed in a an island community is finally going out. No it’s not thanks to the PN. It’s not an electoral promise they are keeping. It’s an obligation to remove that should have been fulfilled since 1998. What Tonio is worried about is that the Maltese are diligent enough to keep all the receipts for their flights since 1997. He worries because had the Commission gone to Court about the Tax and had the Court decided that the tax should never have been, then, technically, the government would have had an obligation to reimburse that tax to all citizens who had paid it.

Now that’s something our stable economy would have liked.

*J’accuse has long argued that travel abroad should be heavily incentivised by government to ensure a holistic education for citizens. It is one way to work to minimise the effects of living on an island. Travel & Internet for everyone. That should be a mantra for the next few years.

Cheap & Cheerful: at last?

 MIA: Centre for Maltese Emigration Control

Cue: beethoven’s 9th. Just in case you miss this article in the Times. J’accuse would like to say “told you!” Comments will be limited at this stage but for those who want to know more about what J’accuse had to say about departure taxes look for “Cheap and Cheerful” in the search engine at the bottom of this page:

Malta must lift the departure tax or face the European Court
Malta will be taken before the European Court of Justice within a few weeks if the government continues to insist on retaining the airport departure tax. The Commission decided yesterday to reject the arguments made by the Maltese authorities in response to two legal warnings that the tax is discriminatory and so breaches EU law.

The EU executive is now set to move on to the third and last stage of the infringement procedure by lodging a formal complaint with the European court. The government, therefore, has to decide whether to remove the tax or fight the Commission in the Court.

The government halved the tax from the beginning of this month, to Lm10. But this has obviously not satisfied the Commission. “The airport tax is discriminatory as it is only levied on air passengers beginning an international journey outside Malta,” the Commission said.

“The tax, therefore, puts an unfair burden on residents in Malta, and makes it more difficult for them to receive and provide services in other member states.” The Commission is arguing that domestic destinations – the Malta-Gozo route – are exempt from the tax and that there should be no differentiation between domestic and other intra-community flights.

The Commission has been communicating with the government over this matter for almost a year. The first letter of formal warning was issued last July followed by a reasoned opinion in December.

Other J’accuse links related to the Departure Tax:

Cheap’N'Cheerful Slash? - I.M. Jack (1) – I.M. Jack (2) - And Now the News – Jesus Saves (Tax) – An Offer We Cannot Refuse – The Big Picture – Ghamluha FATTA – Il-Mitjar – Taxing Costs – October 31st – Wake Up and Smell the Budget Airlines – Cheap’n'Cheerful Flights – Duh! – Departure Tax Profits – Cost Breakthru? – Go Mobile Indeed - Cheap’n'Cheerful Flights -the Saga Continues – Jazz on Travel - A Taxing Question -

Jesus Saves (Tax)

It’s the talk of the town. Storm-struck Malta is also awe-struck at the power of Jesus (and George). As Easter get’s closer the Nationalist directed government has taken to whipping very religious bunnies out of its apologist (and dusty) christian-democrat hat in order to impress an ever-more baffled populace. The concept of lay government had already been feebly swaying as the ultra-catholic gales of majjistral have attacked it from all sides. No divorce, entrenchment of abortion, a hard life for unmarried couples and any other sneeze that the catholic lobby could conjure have reinforced the winds of Jesus-karma that presumably are the key to the next election victory according to the wise priests at Pieta’.

 If that was not enough, now we have George to feed the ardent flames of sainthood. Preca I mean. He will be sanctified on June whatever and many faithful servants of the Lord will be travelling to the Caput Mundi in Rome for this monumentous occasion. This mass travel must have lit many panic buttons in the minds of the Gvernaturi tal-Pajjiz. Joe and Lawrence must have noticed that at some point in June quite a few planeloads of accolytes of George P will be heading onto a plane and paying the appropriate travel ticket + taxes treat that the government reserves for all those who try to call themselves frequent travels.

Then they noticed the big big hitch… most MUSEUM members do not normally travel much more than to the Ta’ Pinu Sanctuary in Gozo and had never been exposed to the exhorbitant taxes that Ceasar has deemed fit to charge the souls of this world whenever they decide to leave the island for a holiday. How would the government avoid the massively efficient MUSEUM network from suddenly discovering the multiplier effect on the hole in the pocket that is the Departure Tax? Easy. Exempt anyone travelling to Rome on or around those days (I am told that a Hamilton Travel Group missed the tax break because their return flight is timed for 20 minutes after midnight after the exemption).

That was not enough. Seeing that most MUSEUM people also double up as educators of this island, the Ministry for Education promptly announced that schools would be closed on the day following George’s official admission among the plethora of Saints much to the pleasure of all hagiographic enthusiasts. No taxes and no education for a day… the government was on a roll. I am told that the Curia was literally head over heels at this wonderful news.

It was then that the newly crowned Bishop of Gozo must have seen that this would be a perfect time to announce that he would be shooting off Down Under for a little session of prayers with the Youth of this World. Yahoo! – all the people say. All Latter Day Catholics who had begun to plan a tax-free skimper across three continents were slightly disappointed with the governmental measures this time round. In fact GonziCo announced that it had an available fund of LM5,000 (€12,500) in order to assist any young people who want to go to Australia with the Bishop of G. So – no tax break – but a virtual sponsorship for avid prayer machines. Time to revise your Hail Holy Queen.

No Mother of Mercy can probably explain this baffling behaviour by the Nationalists in Government. Their obtuseness in confusing what is lay with what is catholic is incredible. Christian Democracy is not really the problem. Real Christian Democracy is not about sucking up to the latest prelate but about a just society of equal values and respect of the human being. It is not about tax breaks for the men in black but about a value based society in which everyone feels included. I would not like to make a mountain out of this Golgotha, especially in this Easter period but I do find the backward summersaults that this government is prepared to perform for the sake of the Catholic Lobby is beginning to be more than suspicious.

Does this government really believe that this is the way to win voters over? Even if it is not a vote-catching campaign what does it really tell us? If this is really a sensitivity to the mass mobility needs of a choked population then why not a tax-holiday during such periods as Christmas, New Year, Easter and the Oktoberfest in Munich? The tax break for George’s graduation ceremony is also an implicit admission that the tax is wrong in the first place. If it was not so burdensome there would be nothing to have a break from on “extraordinary occasions”.

The nationalist party in government needs a few of those brush up internal seminars questioning what ever happened to the Christian Democratic inspiration that inspired the 80’s movement of peaceful resistance and was the initial beacon for the changing nineties before something went awfully wrong… and it all went up in Unholy Smoke.

***

George Does Not Save Much (Birds)

And while we are talking about saving, the above picture appeared in today’s Times on the same day that our earthly George was meeting Environment Commissioner Stavros Dimas for an urgent meeting regarding the Spring Hunting issue. Pictured (Times photo) is a dead Pallid Harrier – shot out of the blue Maltese sky a week before the start of the Spring Hunting season. The last bit of information is actually superfluous since even if it were within the Hunting Season the shooting of this bird would still be illegal.

The government should be a little less concerned about saving our souls and more about saving those unprotected creatures who were unfortunate enough to opt to fly through the Maltese tax-laden skies.

RyanBlair (Cheap’N'Cheerful Flights III)

Bang! We last spoke about the saga when the MIA unpublished report was reported in the Times. Ryanair have ‘replied’ with a press conference also reported in the Times. I love the part where in reply to allegations that Ryanair only carries cheap tourists Mr. Cawley states that Tony Blair has chosen Ryanair three times out of five for his holiday destinations. Now that’s a Q.E.D. if ever there was one eh!

Here is more of the music:

“Mr Cawley urged Malta to follow the success of Ryanair’s new route to Riga, Latvia. In seven months, the airline carried 650,000 passengers to the Baltic country and hotels practically cannot keep up with the influx. “And with all due respect, Riga is not even remotely as attractive as Malta.” But Ryanair estimates it would cost it �25 per passenger to operate to Malta – a figure made up of airport and handling charges, plus government-related security costs. MIA’s discounted offer of �19 to all airlines to certain destinations was still not attractive for Ryanair, Mr Cawley said, given that most other airports it was operating to were charging just �7.50. MIA once again came under attack, with Mr Cawley saying that a private monopoly did not have the social interests of the people at heart. He urged the airport to slash its rates to all airlines, provided they guaranteed big numbers in return.”

 

There you have it. Straight from the horse’s mouth. Valletta like Riga? Where oh where could the problem lie? Any answers? Fausto? Bocca?