Air Malta pilots will be meeting on Tuesday to discuss their future following the launch of Ryanair subsidiary Malta Air, amid fears the national airline will be driven out of the market.

The meeting is being organised by the pilots’ union ALPA. Malta Air was set up following agreement with the government, which has welcomed it into the market.

However, pilots are expressing concerns. “We are mostly worried not because of the new airline, as Ryanair has been here for many years,” a cockpit veteran said.

“We are more concerned about the government’s real intentions over this deal, teaming up (it has 1 Ordinary B share in the new airline) with a company which has practically brought Air Malta to its knees,” he told The Sunday Times of Malta.

“The problem is not competition,” said a first officer. “The real problem is the long-term hidden agenda. We are not stupid. Malta Air – or Air Malta in reverse – will slowly dilute the national airline and make us irrelevant. The unwritten intention is to drive us out of the market. A slow death.”

So far in the highly unionised national airline, only ALPA appears to have expressed worries about this major development in the local aviation sector. The GWU, which represents the bulk of the airline’s staff, has not yet voiced any concerns and neither have the cabin crew and engineers’ unions.

Following the Malta Air announcement last week, the government, through Air Malta chairman Charles Mangion, a political appointee, met the unions individually to reassure them that Malta Air will not compete with Air Malta. He is expected to tell the pilots the same thing on Tuesday.

What’s the deal?

Ryanair, the most successful of low-cost carriers, has been operating in Malta for at least a decade. It offers cheap flights to many destinations, eating away at Air Malta’s market share, which as a legacy carrier cannot compete despite changing its business model.

Ryanair operates six planes in Malta, flying to 61 destinations. Over the past few years it has surpassed Air Malta in the number of passengers carried in and out of the country, despite the fact that Air Malta also increased the number of passengers and destinations, save for a period when the government was trying to shrink the airline to sell it to Alitalia.

Through the new deal with the government, the six Ryanair planes will be painted with Malta Air colours – the same red and white used by the national airline, together with a similar logo – the Maltese cross – used on Air Malta tails.

Experts describe the livery and the name of the new Ryanair subsidiary as “a clone of Air Malta,” deliberately chosen. According to the few details given, it will register its planes in Malta while its 350-strong staff manning the current fleet, will pay taxes in Malta.

What will Ryanair change?

So far nothing – just its marketing which will be boasting some connections identical to Air Malta’s. In the long term, Ryanair intends to boost its Malta Air fleet to 10 planes – a similar number to Air Malta’s – and increase flight frequency and destinations.

It will also look to having the maintenance of its planes carried out in Malta. The service is already offered by Lufthansa Tecknik and SR Technics to several other airlines.

According to experts, this could possibly lead to the future “sale” of Air Malta’s hangars and engineering team. The government already had plans to hive off these facilities.

Was government needed?

No. Ryanair is much bigger than Air Malta and generates a turnover of nearly €7.5 billion.

An industry expert who spoke to The Sunday Times of Malta described the new partnership as “very strange” – the Maltese government is the largest shareholder in Air Malta and Ryanair is its largest and harshest competitor.

Air Malta employees who spoke to this newspaper expressed their disbelief that one of their own directors, Ronald Mizzi, had signed the deal with Ryanair on behalf of the government as Tourism Minister Konrad Mizzi’s Permanent Secretary.

“They really have lost the meaning of conflicts of interest,” a senior Air Malta official observed.

Under EU rules, Ryanair could have done whatever it did without the permission or involvement of the Maltese government.

What’s in it for the government and Ryanair?

According to experts, the deal is “an excellent one” for Ryanair as it has tied the government’s hands whenever it needs any form of support. Ryanair already benefits from millions of euros in subsidies from Maltese taxpayers given in the form of “marketing” help whenever they open a new route, in order to get around EU competition rules.

Under this deal, Ryanair would find it easier to “pull strings” at the Malta Tourism Authority if it needed to, an aviation expert said. At the same time, despite what the government is describing as “a golden share”, it will have absolutely nothing to do with the running of Malta Air.

Malta Air is formed of 150,000 Ordinary A shares owned by Gulliver Holding Ltd – a Ryanair subsidiary – and just one Ordinary B share held by the Tourism Ministry.

While the government has accepted that it will not be represented on the airline’s board of directors, and is a dormant shareholder, it only tied Ryanair to the condition that it will need the government’s permission to change the name of the airline.

However, Ryanair is not tied down by any conditions on how and when to invest – it can always decide to close down Malta Air and open a new airline with a new name.

Can the airlines co-exist?

Some experts have their doubts, particularly due to the constraints of the Maltese market, even though on paper there is nothing precluding this. Despite Prime Minster Joseph Muscat’s reassurances that the two airlines will not compete against each other, the reality may be quite different.

“Do not buy what Dr Muscat is saying,” one expert said. “Ryanair and Malta Air will fly to Rome, London, Catania and Brussels, sometimes to different airports but to the same destinations. These are among Air Malta’s most popular routes. Through the new airline, and now with the help of the government, Malta Air will eat further into Air Malta’s pie. That is obvious.”

Missing details?

The deal is seen by some as a long-term strategy to let Air Malta die a natural death and re-open a new Maltese airline.

“Obviously, Malta cannot depend on Malta Air (Ryanair in disguise). At the same time, Air Malta as it is cannot survive,” one expert argued.

“Our reading of the latest development is quite clear. It’s a long-term plan for Air Malta to shut down and transfer operations to a new airline in a seamless, undisrupted way. That will give the government the opportunity to have a new airline, with fewer staff, higher efficiency, new working conditions and less unions.

“So far the deal looks excellent for Ryanair, good for Malta’s tourism industry, bad for Air Malta and disastrous for its employees’ future. Obviously, no government will admit this plan, openly.”

Neither the government nor Ryanair answered questions sent by The Sunday Times of Malta until the time of writing.