Decision time for Air Malta

Air Malta is about to decide on a fleet modernisation programme for the coming years. It has taken the airline quite some years to arrive to a conclusion about the future composition of its fleet.

The airline is currently operating five aircraft, purchased brand new in the late 1980s and early 1990s, as well as a number of other aircraft on long lease, two of which originally belonged to the Air Malta but were sold and then leased back.

The fleet today consists of two Airbus A320s and three Boeing 737s - all five owned by Air Malta, four Boeing 737-300s and two Boeing 737-200s on long lease and an A320 leased for summer 2002. These will be joined by another new A320 sometime in May or June this year, also on lease.

The last time Air Malta placed an order for new aircraft was in 1994 when it ordered four Avro RJ70 Avroliner regional jets.

Previous orders for new aircraft were made in the early 1980s for three Boeing 737-200s. These were the first new aircraft ever owned by the Maltese carrier.

A follow-up order for another three Boeing 737-200s was made in the mid-1980s. It was also at this time that Air Malta departed from its tradition of being an all-Boeing airline and placed an order for an Airbus Industrie A320.

The choice was a bold one in terms of technology because Air Malta was to become one of a growing number of operators flying a state-of-the-art airliner that has a revolutionised cockpit interior design complete with side-stick controls instead of the conventional joystick and employing a fully computerised fly-by-wire system.

The A320 reached Air Malta in 1990 and two years later the airline exercised its option to buy a second A320 which was delivered in 1992. During this period the airline went ahead with yet another order, this time for three new Boeing 737-300s.

Air Malta has made a name for itself in the airliner industry having, on several occasions, been awarded high performance certificates by both aircraft manufacturers for the enormous amount of flying done by both the B737 and A320 types. Air Malta`s high utilisation rate of both types served as the perfect publicity for the two airliners.

The national carrier is now about to decide on the most ambitious project undertaken so far in terms of fleet modernisation. It requires up to 10 new aircraft. However, they may not be ordered or delivered all at once but could be staggered over a number of years.

Contrary to what happened in the past, the airline need not buy all the aircraft it requires. The leasing industry has made great strides ahead and today large leasing companies, like International Lease Finance Corporation (ILFC), buy new aircraft themselves and then lease them to airlines.

Air Malta has already experienced and is still making use of such facilities offered by leasing companies. In 1992, it had leased a new A320 from GATX. Since the late 1990s it has been leasing new Boeing 737s and is about to lease a new A320, still being constructed at Airbus Industrie`s plant in Toulouse, France.

One possible scenario would be for Air Malta to sell the five aircraft it owns and then lease them back until the arrival of new aircraft, also on long lease.

The types Air Malta is currently considering include B737-700s and/or 800s or A319/A320/A321s. The B737s would be fitted with winglets to save on fuel.

Of course, the airline might opt to purchase its own aircraft as it did in the past. However, this scenario is highly unlikely given the current circumstances facing the airline industry.

The perennial question remains: will Air Malta become once again an all-Boeing airline or will it retain a mixed fleet of Boeing/Airbus aircraft?

The stakes are high. Air Malta becoming an all-Airbus fleet would mean that Airbus would have to offer a generous deal to offset conversion training costs for air crew and engineers to change from Boeing to Airbus.

On the other hand, for Air Malta to return to an all-Boeing fleet would mean a loss of expertise which the airline has gained in flying the revolutionary A320 type. This expertise was one of the reasons which led to an agreement with Lufthansa to service its Airbus fleet in Malta.

Maintaining the current Boeing/Airbus mix would enable the airline to maintain operations if one of the types is grounded for some reason by the manufacturer.

Will politics be the final arbiter especially now that the country is in the final stages of its negotiations for entry into the European Union? In my opinion, the decision would be motivated by a mix of various interests: political, economic, financial and practicality.

And the aircraft would not be the only new feature at Air Malta. Indeed, the airline is also planning to introduce a new livery; the fourth since its inception.