The announcement of Ryanair’s Malta-based airline Malta Air shook the Maltese aviation industry, with hope and fear inter-mingling amongst investors, employees and consumers as €1 billion stands to be invested into the island.
After turning the fortunes of the national airline Air Malta around, recording the first profit in nearly two decades just this year, Minister for Tourism Konrad Mizzi believes Malta Air is the next step in getting brand Malta flying.
1. So, how did Malta Air become a thing?
“It started around October 2018,” Konrad Mizzi told Lovin Malta from Valletta.
“We’ve been working with Ryanair closely ever since they took over the portfolio. I had met (Chief Commercial Officer) David O’Brien early on and we had worked very closely on expanding their footprint and we had increased their number of routes consistently. At one point, we had an increase of 12 routes and then another nine, so the growth was significant, and we built an element of trust as well since they were delivering on numbers, they were opening up new routes which you would think would be really hard to open up, Amman, Jordan being a case in point.”
“My only concern was, if you look back 10 or 15 years ago, people would be worried if SGT left Malta, and I grew increasingly worried about what would happen if Ryanair would leave Malta.”
“I had a long conversation with the Prime Minister about Ryanair in Malta and about their growth and we all agreed that it would be a good thing for them to grow through the season and everything else but we wanted to try and tie them in as much as we possibly could so that was always in the back of our minds.”
“I had approached them on some joint collaboration on leasing of planes, because we couldn’t find planes at the time from Airbus, and they had the same problem because they had bought a company called Laudamotion, which runs on an Airbus fleet, so we were looking to see if we could collaborate on that.”
“After we had done the Air Malta collaboration on the sales of flights we decided to meet up again in London and we were there at the World Travel Market in London in early November. We started exploring opportunities and I highlighted what we were after, and I told them ‘why don’t you set up a base here? We’ve got Malta MedAir if you want, it’s an airline separate from Air Malta and everything else and we could potentially do something with Medair’.”
“At first they weren’t sure about it, but then they reverted back and then I had kind of realised that within Medair we had the Heathrow and Gatwick slots so I couldn’t really use the Medair vehicle. So we decided to help them create a new airline and we did it as Medair, we set it up and they acquired the shares for it. We worked with them on a plan whereby they would transfer their 61 routes onto the new airline, they would transfer the six planes they had and they would grow it over a three-year period.”
“The most conservative estimate is that they would grow to 10 planes, by 40% in three years. It could grow to 12 or 14 planes, but it depends on some things.”
“We then spoke to them about having more operations in Malta and they agreed to base the head office of the new airline in Malta, and they agreed that they would employ around 350 people here, so that was positive.”
“We discussed the name and we kind of agreed on the name Malta Air, but we wanted to introduce some safeguards so we introduced this ‘golden share’ in the company which gives us protection that they wouldn’t leave Malta, they wouldn’t move the Air Operator’s Certificate (AOC) out of malta and that we have rights over the name Malta Air, and that’s practically the story.”
“I think even though the investment is important and even though staff and employing people in Malta is important and all of that I think the story is more about the future of the tourism industry, retaining them here and growing them significantly – Ryanair operates in 250 airports different airports around Europe and from Malta they’re flying 61 routes now.”
“Even if we go up to 120 routes that’s going to be a big leap for us and we can achieve that, it’s good for the country as well in addition to that obviously from our perspective we are also growing Air Malta which is quite important for us.”
“In our view, they’re two separate propositions, two different business models. Malta Air is a low-cost carrier operating from Malta with different routes, Air Malta will focus on the main airports in Europe, Middle East, Africa, even Sub-Sahara.”
“We are hoping to start flights to Accra in Ghana next year, and we’re also interested in the Indian subcontinent in India. We’ll be growing our business class, and Air Malta will focus on cargo which Ryanair doesn’t do, and Air Malta will also develop a pilot’s academy in Luqa.”
“The business models are different – Ryanair doesn’t do cargo, and they require 25-minute turnaround so you cannot be delayed because of cargo and everything else, they don’t do business class so it’s a different model.”
“We’ll be sitting down with them to explore new route opportunities in the next two to three months now, and they’ll be transitioning planes into the fleet immediately, the first plane is already on the Maltese register. The colours on the planes will be painted next April.”
2. How do you feel the Maltese public reacted to the announcement of Ryanair setting up Malta Air?
“The feedback from the tourism sector has been positive because there was a lot of talk around whether we can actually sustain the sector moving forward; what if there is a downturn in Europe?”
“What about the growth that we’re seeing in Turkey recently? This provides more reassurances that we’ll be able to ensure that we’ll have enough arrivals in winter, and it’s about futureproofing.”
“Maltese people are very keen about new destinations – we’re being approached by different countries overseas and different tourist boards to operate flights to their countries.”
“Obviously, people at Air Malta did ask some questions, that’s the honest truth, and the CEO did write to all employees and they’ll be briefing them about the fact that they’re two separate airlines, that we can co-exist and that Air Malta will still grow. Air Malta will receive two new planes soon, at the end of July, and early August.”
“Some people were asking what the real motivation was for Ryanair to come here and we tried to explain to them that Malta is an important market they can grow in and the fact that the government is a partner is reassuring to them, but it’s also reassuring to us, so that’s more or less the mix.”
3. There are concerns that we are seeing the ‘cartelisation’ of the aviation industry in Malta, with Malta Air handling low cost, shorter routes and Air Malta handling larger airports and longer routes. Are we?
“No. As the Malta Tourism Authority and the Malta International Airport, we’re trying to diversify the number of airlines which fly here, so we’re trying to encourage that on every airport, every route will have two airlines operating at least.”
“So in addition to Ryanair we have Easyjet, Vueling, Volotea, we have Wizz, and these are all low-cost carriers. In addition to Air Malta, we have Alitalia which is increasing its capacity, and we have Lufthansa, Swiss Air, British Airways, Emirates, and Qatar Airways now. There’s a number of new airlines coming in like T’way Airlines, so no, our focus is going to be to expand the number of airlines that operate in Malta.”
4. Why did you choose the name Malta Air?
“Both of us (Ryanair and the Maltese government) wanted Malta in the equation once we decided that it was a Malta-based carrier.”
“Obviously, it’s going to be a Malta-based carrier and it’s going to serve the country, so they were keen to have the Malta name in the brand, and I understand that because they want to serve the country, they want to sell the country.”
“They’re still going to use the Ryanair website to market the Malta Air connotation, and I think that what’s going to happen is there will be more awareness around Malta because the Malta name is going to be carried by two carriers, so there’s going to be a bigger cake, a bigger pie and I think both airlines will do well out of it, and the country in general as well.”
5. Malta Air is literally Air Malta reversed, and some are concerned about possible copyright infringement onto the Air Malta brand name. Are you worried Malta Air will damage the strength of the Air Malta name?
“We thought about the name but essentially Ryanair already operated 60 flights to Malta so they already were based here heavily – but they weren’t tied in, so we wanted to lock them in… I think that was important.”
“We wanted the name to encompass the Malta-based component because it’s a Malta-based airline… if it was Mediterranean Air or something else there wouldn’t be that connotation, so I think Malta as a whole would benefit.”
6. Don’t you think naming the airline Malta Air will impact the brand strength of Air Malta?
“I don’t think so. I think it will create more awareness about Malta per se, it’s going to create curiosity in people who never thought about flying Air Malta, and Air Malta and Ryanair operate on different flights. I think it will create a larger market for Air Malta. Air Malta needs to continue growing, we need to be bold, we need to continue changing our practices in line with international standards and we’ll invest and I think we’ll do well.”
7. Will Malta Air lead to Air Malta being left behind?
“I don’t think so, I think Air Malta is looking forward, from our perspective as a shareholder the direction we’re giving Air Malta is to grow in Europe, towards the Middle East and Africa, grow into India, especially in the medium-haul, and open up new markets for the country and operate that kind of premium brand.”
8. Did you communicate with Air Malta employees in the run-up to the launch of Malta Air?
“Absolutely. I mean, firstly we’ve communicated to the employees and explained to them that the vision of Air Malta is not to shrink but to grow. New planes will be delivered in the summer and that’s a commitment we did, an investment in the airline.”
“In addition to that, we do recognise the fact that Air Malta has contributed significantly to our country, and they will continue to do so and the fact that Air Malta is going now into Africa, into India, Air Malta is fulfilling its economic growth to grow the country and push boundaries.
“So I think it’s an extremely important role for the country and for Malta itself. I understand that the employees at Air Malta went through a lot of change, they went through two waves of change and we did pause a little bit on the change as well because we understand that there’s only so much change that people can get accustomed to, and after change you need to stabilise your routines again and look at the next level of growth.”
“I think if over the summer we will stabilise, we will get cooperation from the unions to stabilise performance, on-time performance rosters and all that, Air Malta will also do its part and I think we can prepare for more growth next year.”
9. How will having Malta Air based locally benefit existing Air Malta employees?
“You work for Lovin Malta, you used to work for other media houses, so with Malta Air people can decide to shift around, they can decide where to go if someone offers them a promotion for example.”
“We’re going to try to create the right environment to keep people at Air Malta for sure, but the fact that people have a choice, I think, is good, especially for pilots because their only choice was to go overseas which is quite challenging.”
“In addition to that, I think the broader thing is that we’re going to create more awareness about the country, it’s going to be a strategy of two airlines growing in parallel and I think through that awareness Air Malta can grow.”
10. When can we expect Malta Air’s first flight?
“Summer 2020. We’re just discussing with them when the tickets will start being sold as we’re in the final stages of finalising the dates.”
11. Finally, what would you tell to people who aren’t feeling confident in the prospect of Malta Air?
“Up to a week ago, we had Ryanair operating 60 routes to Malta and we were completely dependent on them because they could leave at any time. Now as you said Ryanair has skin in the game, they have a Malta-based AOC.”
“There’s going to be a big base of staff and employees working in Malta which is going to create a lot of opportunities for the Maltese people but more importantly they will grow into a number of leisure markets which will ensure the sustainability of tourism for the next 10 years.”
“In parallel to that, Air Malta will grow, Air Malta is going to open up a different segment of markets and I am pretty sure that through this bold move by Air Malta we will be in a position to create a new type of traveller to Malta which will be more affluent, and I think the two will complement each other.”