A cost-benefit analysis compiled by E-Cubed Islands, a consultancy owned by Bank of Valletta Chairman Gordon Cordina, concluded that the airstrip project in Gozo being proposed by the government would make economic sense despite five companies having folded after investing in an air link between the two islands.
Estimating the total costs of the project to be around €2.5 million, Cordina and co-author Victoria Apap concluded in the study that 100 passengers per day, paying some €30 each way, could make the project economically viable.
Cordina said that according to regional statistics and assumptions, there already is a significant demand for an inter-island air service, which could reach 35,000 passengers a year.
He said the demand would consist of inbound tourism, Gozitans travelling abroad wanting to reach Malta International Airport quicker and Gozitan professionals who want to travel to Malta frequently for work purposes.
The project proposed by the Gozo Ministry consists of rehabilitating the current heliport in Ta’ Lambert, Xewkija, which has been left in a derelict state since 2008 despite several government workers still being assigned to work at the heliport.
Despite promises that the area was to be transformed into a grass airstrip, the project never materialised as it was not deemed to be commercially viable.
Between 1990 and 2008, five different helicopter companies that started direct air link services between Gozo and Luqa all folded due to lack of demand, incurring significant losses.
Yet Cordina’s study is positive – the project being suggested now could make economic sense assuming costs are kept down and the airstrip is also used for general aviation services, such as pilot academies, training and testing of drones.
Before the last general elections, Gozo Minister Clint Camilleri promised a flight connection between the two islands and suggested that the current heliport should be transformed into a short airstrip that could be used by 9-seater passenger planes.
The project, with a preliminary design by Corinthia company QP Management, through a €38,000 direct order, envisages an extension of the current 174m airstrip to reach 450m and the creation of some four aprons to serve as parking for small planes and the air ambulance helicopter service already in place.
In his study, Cordina suggests that the €2.5 million project, which includes the acquisition of three planes, will cost a further €1.2 million a year to run.
The added value generated by the project, including more quality tourism, tax revenue and some 20 additional jobs, makes the project viable and resilient “also to the most extreme shocks that could take place,” according to the study.
Transport industry sources who spoke to The Shift poured cold water on the study’s conclusions, suggesting that much of it is based on assumptions rather than concrete market research.
“First of all, the study’s valuation of the costs involved in this project are very low, particularly considering that the €2.5 million assumed as total costs also include the acquisition of three planes. This is quite stunning, to say the truth,” a veteran transport expert told The Shift.
“In addition, the demand included in the study is just an assumption that is not based on specific market research. It is difficult to have that demand in Gozo all year round,” he added.
So far, all transport services between Malta and Gozo are loss-making.
While the conventional ferry crossing, operated by state entity Gozo Channel, is registering millions in losses and being kept afloat through government subsidies, a fast ferry private passenger service that started operating last year through two different companies, Virtu Ferries and Gozo Fast Ferry, is also running at a loss.
The cost-benefit analysis carried out by Cordina’s company was commissioned through an €11,500 direct order by the Gozo Ministry.
The Shift has reported that companies partially owned by the Bank of Valletta chairman – E-Cubed Consultants Ltd and E-Cubed Islands Ltd – have raked over €1.4 million in government consultancy contracts since 2013.
Cordina pocketed €90,277 last year from what he describes as a “part-time role for a limited period of engagement” as chairman of Bank of Valletta, according to figures published in the bank’s latest annual report.
Typical consultant who is paid in order that he starts from the conclusion that those who commission the study want to hear and then works backwards. In the meantime Córdina’s BOV share price is continuing to skyrocket higher in response to his 188 million settlement re Dieulemar
Has this guy ever turned up with a negative assessment of any gov, project? I guess the 90K for a part time job at BOV would suggest the answer to my question.
Unfortunately political bias and making money, seriously compromises a supposedly qualified economist to come up with such rubbish.
The quality of the advice given here by Gordon Cordina’s company E-Cubed Islands makes me glad I don’t have shares in BOV.
Unfortunately they are behind the justification of many other schemes which no one in their right mind would propose due to no technical justification….Gozo tunnel for instance. Pity such brilliant minds succumb to this and what they produce is nothing but an exercise in confirmation bias
He should be paid from the profits that this company will make . It is only fair ,no?
It is amazing how this island is manipulated not by its citizens, but by political Chess.
In 1987, I initiated a programme and presented to the Government, was accepted by the Government after a titanic struggle at the time, and which was a success with regards to number of uses by foreigners and Gozitans alike. I wrote a book on the subject called My Life in Aviatioon, the Malta Gozo Link. The Gozo project worked up to 2004,with SUBSIDIES. It was only when Air Malta joined the equation under the usual “Trumpets” that failure started to show through during 1998/99 when it was clear that Malta would join the European Union. I gave advice to the Minister concerned on how to tackle the problem and I was ignored by authorities at the Airport. They were dead against it. I wrote an article in a local newspaper again warning at the lack of wanting to proceed with this project. Yes the lies won the day. THE BOOK IS AVAILABLE, and I will make it available for only 20 Euros. I spent thousands to publish this hardback. I also launched the book at Gozo University for enlightenment. So sorry for Gozo to miss the bus.I say this openly. I did not want to be part of the project, but would have been ready to advise free of charge. Yes indeed. If there are people regretting this., I would say, “THIS IS MALTA. It lags in aspirations, thought that encourages the future, but waste money on political associates. Best wishes to all Gozitans. I love you and wish you well.
This guy heads a leading bank in Malta, I sleep well at night, not a penny at BOV.
Funny how planes are going to make a profit, where the ferries never managed!
I wonder if any private investor would put a cent into it. An IPO for a p.l.c. might provide the answer once and for all.
Good Morning Lawrence Mifsud. Hope you are well. Just to clarify and divulge what I said in 1987/88. Simply this. This venture cannot work on its revenue. Subsidies is always part of the equation. The amount must be reasonable. But never without subsidies. I never said that there are no other alternatives. Yes Gozo needs an unabused small airport. I mean non abused by speculators or Govt Oligarks. Yes it can be done. Have a good day.
It is worthwhile to include a Gozo-MIA leg as part of international ticket sales. Passengers living in Gozo wanting to travel abroad would be more inclined to buy a full ticket that starts from a domestic airport in Gozo if it is convenient.