Over the last 20 years, we have seen a long list of aviation experts and statements of intent by various top brass at Air Malta advocating the way ahead for the carrier.
A number of alternative airline business models have been offered and tested, including one highlighted in an opinion piece by Air Malta’s former CCO, Brock Friesen (January 18).
All attempted strategies had their pros and cons but one underlying factor remained unattained throughout, that is, the removal of government interference and the bloating of its payroll fixed costs by useless staff intakes come every election time under both administrations.
In his article, Friesen makes some valid observations but also indulges in some contradictory statements such as when he states that the now- prevalent airline business model is point-to-point but then goes on to recommend that Air Malta becomes nothing but a franchise lapdog to some major carrier feeding into its hub.
Large hub-and-spoke carriers, like Lufthansa and British Airways, have one or, maximum, two super-hubs such as Frankfurt, Munich and London Heathrow. So, basically, Friesen is advocating that Air Malta operates to only one or a maximum of two hub airports twice or three times a day. This is hardly the kind of economies of scale to justify the operation of six or eight aircraft.
In effect, Friesen is recommending a pure franchise operation whereby Air Malta would lose its brand value and gain very little over and above its current extensive and efficient code-share network, which, in turn, feeds into the hubs of a number of major carriers and not just one.
Franchise contracts are usually allocated after a RFP by the dominant carrier and there is no guarantee that Air Malta would be the preferred choice. Moreover, franchise contracts are normally for a three-to-five-year period and then what?
It will be all blood, sweat and tears, apart from good money down the drain, if the political will is not there- Tony Zahra
Friesen, in line with Air Malta chairman David Curmi’s recent statement, argues enthusiastically about setting up outlier stations for Air Malta to exploit, particularly in Italy. For starters, this commercial opportunity existed in Italy up to 15 years ago and ended the moment that the Italian market was totally deregulated. Numerous carriers jumped in, eating away at what was Alitalia’s lucrative domestic market and adding a mortal nail in its eventual coffin.
Moreover, from an operational point of view, any foreign base operation requires foreign local operatives. An Air Malta base in Catania, Rome or wherever would, of necessity, have to employ local flight crew and ground staff, since placing Maltese flight and ground crew there would be exorbitantly expensive.
One of the most salient measures outlined in Curmi’s latest recovery recipe is the ramping up or reincarnation of Air Malta’s charter vocation. This is a business zone which, at one stage in Air Malta’s development, accounted for around 60 per cent of its flight hours and 50 per cent of its revenues.
These charter programmes were primarily on behalf of the major European tour operators and, also, a seat-availability vehicle for small- and medium-sized tour operators via the operation of ‘consolidation’ or ‘part-charter’ flights.
This highly lucrative Air Malta operation was first given a severe blow by the insane fleet re-equipment with uneconomic British Aerospace RJ aircraft and, in the early 1990s, dealt the mortal blow by those who, like Friesen, gave the cold shoulder to tour operator-generated business and, indeed, his belief in disintermediation.
The Malta Hotels and Restaurants Association (MHRA) fully and unequivocally supports the recently stated road map for a final and lasting attempt to save Air Malta but restates that it will be all blood, sweat and tears, apart from good money down the drain, if the political will is not there.
Tony Zahra, MHRA president