The Air Malta Frankfurt route cut - and roses from Athens

Air Malta’s fundamental change to its Germany operation, in particular the total cessation of flights to the continent’s top global hub, Frankfurt, has stirred up controversy. In the following, we will look at the already announced replacement and the pos

At the same time, there is also plenty of good news for Malta’s air transport business from Greece.

Condor - a sensible replacement

As already pointed out in this paper regarding the Hamburg route (TMIS, 4 September, online 6 September), and much earlier in the year in another form, Condor seemed a clear option as a contingency addition to the case for Air Malta reducing the Frankfurt route.

Condor has been operating the route once a week during the summer months as the operator for the ‘Cruise&Fly’ arrangements of TUIMeinSchiff, so adding two scheduled flights apparently in addition to the once-weekly cruise charter run was also a logical step. By providing direct sales, but also being open to tour operators, it is an appropriate replacement on the point-to-point market as far as average tourists are concerned. Condor surely welcomes the opportunity, since some traditional markets, such as Turkey and Egypt, are not so lucrative at the moment. As explained in the above article, Condor has a long Malta tradition dating back to the early 1990s, with some interruption.

With the uncertainty and the Etihad/Alitalia possibility, it should be clear that such an important market would require some kind of contingency planning. Air Malta, however, provided a higher (up to daily) frequency plus potentially offering a wide range of both domestic and global connections – as the only evening flight southbound, while in more recent years running parallel to a Lufthansa afternoon run northbound.

Pricewise, however, Lufthansa’s double daily nonstop run, or Air Malta combined with a feeder from Lufthansa, Swiss or Austrian via southern hubs, also remain a good and competitively priced option in comparison.

Reasons for retreat

Certainly, of course, one cannot know whether the Air Malta exit from the Frankfurt route was an independent decision or a reaction to a possibly already confirmed (but not publicised) Condor operation, even when it was presented in the local press as a quick reaction by Condor to take up the void quite spontaneously after a surprising decision by Air Malta.

Or is it still a knee-jerk decision to try and please Alitalia/Etihad? This assumption, which came up in a newspaper on Monday, was quickly denied by Air Malta’s board, but it might not be too far-fetched.

Have the Frankfurt slots possibly been rented out, as this brings more income than the flight as such? Who would take them up, anyway? Alitalia, Etihad or – who knows – even Ryanair, who plan to fly from Frankfurt to other places (though it is still unclear due to ‘rebates’, which are under scrutiny in the Hesse Parliament)? And how much did Air Malta get for it?

One is sometimes tempted to question the decisions coming from Air Malta as to whether or not they were really taken with the airline’s long-term wellbeing at heart, or for other reasons. Just for example, what came out about the Algeria flights or, in earlier legislatures, the Syria flights or those infamous football sponsorships in Britain and Italy, or discontinuing routes so that low-cost airlines could be given money to take them up again?

The fleet reduction is primarily a result of the negotiated state-aid agreement, and no government can be blamed for the troubles in Libya, which had a significant impact on the profit opportunities and business development of Air Malta in the post-Gaddafi era. This significant geopolitical impact is often forgotten when comparing some pre and post-2013 developments and, in any event, it should be stressed in negotiations with the EU.

This certainly cannot excuse abuse, waste or things such as throwing money after some or dishing out hundreds of jobs, at the same time claiming not to have a penny to others, maybe depending on who or how convenient it is.

Lufthansa has certainly been a sales partner, but at the same time it has also been a tough competitor with its double daily run in recent years. This has also been brought up as a core reason for the cut. Yet massive capacity from Lufthansa is nothing new. From the early 2000s to 2009, the end of its career in the fleet, Lufthansa also sent this ‘Kontschaufel’ (continental shovel, a Lufthansa nickname for the type) Airbus A300 widebody with their domestic/euroshuttle seat layout to Malta on a more or less regular basis, translating into almost 300 seats. And despite the recession of that period, and the A300s coming in, Air Malta could continue.

This raises another point for attention: fares of the codeshared Lufthansa flights. Random checks for various dates show that fares for identical flights, if purchased under the ‘KM’ code, cost some €150-170 more if bought from Lufthansa on their non-stop FrankfurtMalta runs. One wonders what the thinking is behind this idea: maybe that the code-share does not bring anything – because nobody will buy these tickets of course – so one can stop it. Surely that could please other carriers too. Outlandish? Yes, but....

To be fair, on the other hand Air Malta offers return fares from Düsseldorf for €140-170, with full luggage allowance and no tricks, which clearly makes Ryanair uncompetitive. Fares via Zurich, Munich and Vienna, with the southern run operated by Air Malta and the northern one by the LH group carriers, are very reasonable too, if one prefers other flying times, say, or leaving from Frankfurt or Cologne/Bonn.

Yes, mentioning them, there is indeed also the impact of Ryanair putting pressure on parts of the catchment areas: Cologne/Bonn for the north and north-west, Karlsruhe/Baden towards the south and Nuremberg towards the south-east. Each for itself does, however, also have quite a home market, and when comparing fares, if including luggage, there is not really much of a difference. Where one really should feel pressure is Düsseldorf, which has four Ryanair airports in parts of its catchment area, which is clearly too much. For that area, one should have had either Weeze or Cologne/Bonn occupied, but clearly not both. Despite the PR from Air Malta, the fact remains that Düsseldorf has also seen significant cuts compared to what one had over the last years.

By the way, code-sharing with Lufthansa has even opened the door for Air Malta flights from Düsseldorf and Munich being sold via the Eurowings lowcost platform, just as if they are Eurowings flights, because flights with LH numbers (hence also Air Malta operated ones) are sold there.

Clearly, if Air Malta had just pulled two weekly flights into Cologne/Bonn, also a classic destination of theirs from the deepest 1980s, one could have kept others out and balanced one’s owns flights in a more controlled way. Having one or two weekly flights does the job for most airports aiming at point-to-point tourist markets, plus a good frequency at hubs – that’s what Air Malta did in its good years, and that’s what Ryanair does today. It seems to work, doesn’t it?

Goodbye KM 328/329

The Frankfurt route has been operating without interruption since Air Malta’s earliest days, with its two Boeing 720Bs in April 1974. Back then Malta was far less known – let alone as a tourist destination – in Germany; there was no internet and no sales partnership to make Malta or the airline better known. It created a first direct airmail link.

This small, modest and at the same time courageous airline, founded with a lot of goodwill and hope by the young independent island country that wanted (indeed had) to convert from a fortress economy to one based on tourism and industry, hard-working and prudent, prevailed, defying the initial odds. The route survived the crucial start-up years, an oil crisis or two, the age of aeroplane hijacks and bombs, a number of German recessions, the Kuwait war, 911 and what followed, and the Eurozone crisis. Anything – from the iconic Boeing 720B, the B737, B727 and A320 workhorses, to the less significant types like the ‘ajruplan zghir’ RJ 70 to the A310 widebody operated on the route.

Air Malta’s Frankfurt run was also fundamental to the building of first the tour-operator business to Malta, and later specialised offers such as MICE tourism. It also provided key infrastructure for various sectors in Malta also beyond tourism. Today, no big tour operator can afford not to have flight options from Frankfurt in his portfolio. Ending up with practically only Munich, a very few Düsseldorf flights and a trickle from Berlin is not going to help sell more contingents through this channel, as one needs a broad direct flight base.

Today, there is the joint marketing with Lufthansa, Germany’s consumer market is

doing comparatively well, Malta is better known as a destination and prides itself as being a centre of excellence for all kinds of things, with Frankfurt itself being the most important banking centre on the continent, as well as also a leading cargo airport particularly for belly cargo (cargo carried in the luggage hold of passenger planes). There are more transit passengers than ever before. There could also have been even more potential when code-sharing with, for example, Chinese carriers – and still it was decided to stop the route.

Anyway, let us look back at the good for what it stood for, for over four decades...so long KM 328/329...formerly k/a KM 114/115. Hopefully au revoir, not farewell. May the eightpoint cross tail (even when some bright fellow of a designer decided to cut it to a sixpointed one with the current livery) turn up regularly some time again on the Frankfurt ramps, and then thunder down runway 18, positive climb and gear up – heading down south, onward to Malta.

Connectivity of Malta improves via Athens

Greek flag-carrier Aegean (with its regional brand ‘Olympic’) will, as from next summer’s schedule, increase its flights to Malta and then operate four weekly flights to its hub in Athens. Two flights a week will be operated by a mainline Airbus A320, while two flights will be operated by the smaller Bombardier Q400 flying under the Olympic brand, roughly offering the capacity of half an A320. Altogether, it means a significant capacity upgrade.

Aegean has been financially quite successful with this combination of aircraft, recording a net profit of €80 million in 2014 and €68million in 2015. Aegean began its operation on the route with the smaller plane, thus having a lower trip cost risk, and could now expand it.

This means competitive pointto-point flights. But since Aegean is a full-service network carrier, it also opens up more connections to both incoming markets to Malta as well as, of course, Maltese going beyond Athens. Why not a holiday for the Maltese on one of the many beautiful Greek islands to relax a bit away from the ‘rock’n roll rock’.

With Aegean expanding, there is a broader variety of connections with a reliable and value-for-money network carrier through a quality hub in a safe EU country, not only for western/central European markets, but in particular also the Near East (Cairo, Alexandria, Tel Aviv, Amman, Beirut), the Gulf (including Teheran) and the former USSR area. This offers an alternative to particularly the Istanbul hub. Also, for passengers travelling to and fro between western and central Europe, this is good news, since it can potentially offer a ‘via’ choice that is not too far away from Malta.

Unfortunately, Air Malta and Aegean have never developed a code-share agreement, which could have been an opportunity at the time when Air Malta was sole operator. For the central European market, Air Malta can be commended for developing one with CSA in Prague, who started to offer its own flights while Air Malta could also expand. Every codeshare agreement increases the visibility of Air Malta and the destination, while giving customers a wider choice regarding dates and times of travel and, of course, fares. It needn’t always be the mega hub to interchange.

VVB provides Boeing for Greek start-up Air Mediterranean

Malta-registered charter firm VVB, identified locally with its founder Bruce Dickinson, is providing the Greek start-up charter carrier called ‘Air Mediterranean’ with a Boeing 737-400, registration 9H-KAT. The Greek firm is apparently nearing the end of its certifica- tion process and the plane has already been flown to Athens. The 1990-built ex-SAS Norway jet sports the new livery with a bird as its brand emblem.

While slightly less fuel efficient than an Airbus A320, particularly on longer sectors, the low capital cost (meaning the plane is not as costly when sitting on the ground off-peak), reliable technology and cheap spare parts mean it can still be a good option for charter operators with highly seasonal schedules flying not so many hours per year or not wanting to risk high leasing payments.

VVB operates its other B737400 for Air Djibouti, which has been re- launched after 25 years to re-develop the national carrier of this small north-east African country.

Air Malta also operated two (albeit rather new) Boeing 737400s in the late 1990s/early 2000s on lease from other carriers.

Another Malta-registered operator, Air X Charter, provided the services of a small Boeing 737-500 (max. 130 seats) to lowcost airline Volotea to help cover peak season demand. VVB’s Air Mediterranean contract seems to be longer term, since the plane has been sprayed accordingly.

The availability of such aircraft (also by other operators, with various types), in Malta (or also other EU countries) could provide an opportunity for Air Malta to expand its fleet seasonally. One can potentially maintain a low basic cost line on the one hand, but also have the ability to take opportunities and, at the same time, block off markets from competition during the summer schedule, while retaining a basic fleet yearround. With a Malta-registered and based firm one would not run into arguments about foreign firms taking pilot jobs and so on.

This was the standard procedure during Air Malta’s long period of financially successful years without dogmas – except for those of profit and a diverse route network.

Do we need diverse European carriers?

Very often some people rhetorically ask if we need Air Malta or, in a European context, if we actually need all these national or private smaller airlines. Would not three or four carrier conglomerates suffice, perhaps one or two networkers and one or two low-cost airlines?

What makes diversity attractive is that places of geographic disadvantage in particular need reliable links not just domestically but also to the rest of the EU and beyond in order to thrive, that particularly network carriers big and small are the ones that provide the large European economies, but with their connections also many smaller places, with a valuable national, European and global passenger and cargo infrastructure for a strong economy, that there are many direct and indirect employment effects. And last but not least that also the customer has the opportunity of choice between carriers, connections and destinations like this. Air Malta has always been key in reducing the seasonality effect for Malta and its economy, compared to other Mediterranean islands without a home carrier. And, unlike foreign carriers which might even be resident but can remove capacity at the snap of a finger if they don’t like something, Air Malta depends entirely on the islands: it has nowhere else to go. The German language has an excellent word for this: a ‘schicksalsgemeinschaft’.

Even when one might, for good reason, feel let down by Air Malta, or are appalled by the abuse one has read of, the airline is clearly a big advantage for the country. After all, a Malta without an Air Malta would clearly not be the same.

I wish you many happy landings in 2017!

One is sometimes tempted to question the decisions coming from Air Malta as to whether or not they were really taken with the airline’s long-term wellbeing at heart, or for other reasons