The issue on the Air Malta Scotland flights has recently stirred up some controversy.

While for some northern Britain starts immediately north of London, in this article we will keep northern Britain to just Scotland and the border areas of Scotland/England. Possible solutions not only to solve the above-mentioned issue but also to expand services from said area will be discussed. But first a look at Northern Ireland, and some other points along the way too.

Northern Ireland

During the deep 1990s, Air Malta ran seasonal charters from Belfast International. Back then the Ulster economy was in a far worse state, not least because of the political situation. High unemployment rates resulted in a weak consumer market. Even though today one still cannot compare the situation to that in the Republic, progress is there, which has also been reflected in more holiday trips.

The current offer via London-Heathrow (Air Malta and BMI British Midland) involves quite a lengthy stopover time; no great option particularly for the elderly or families with children. While the fare is competitive, the stopover adds to cost. For most Ulster people, it is faster to drive to Dublin and fly with Ryanair. If one is taking a bit more luggage for a holiday in summer that lasts more than just two or three days, take a charter flight. The reason is that with Ryanair, according to their own charges list, one has to add €300 extra return per 25-kilo suitcase (not unusual for a holidaymaker) each, while with charters slightly overweight luggage is mostly tolerated.

Ryanair’s strength lies in its short flights aimed at short trips. One however will have to see whether it is really that great for flights beyond two hours. If a good volume of these trips only took place because they were sold dirt cheap, and if environmental and cost consciousness makes consumers consider making stays a bit longer to get more out of flights, they will have to pay Ryanair’s rip-off baggage charges. For short distance flights where luggage is not the issue, one can fully agree that passengers indeed could move away from flights that are more expensive and go for the lower fares. If they are genuinely cheaper, if time and travel cost from remotely located airports do not eat up the savings made, Ryanair surely can gain. Still, legacy carriers and regional LCCs like FlyBE, which claim to be able to break-even up to a barrel price of $170 (FlyBE have a fleet of very fuel/cost efficient and natural demand-oriented sized Bombardier Q400 and Embraer 195s), are not in few cases the overall better option. So it just depends.

Actually, the Embraer 190/195 and also the Bombardier’s C-Series (in service 2012/13) could eventually be something Air Malta might look into when the Airbus leases expire in 2014 – or before, if one either expands, or finds a well-paid long-term fully secured sublease partner and cash in on leasing arbitrages plus gain on lower fuel and airport costs. The 118-seat Embraer 195 is 30 per cent lighter than an A319 (141 seats), while in practice identical passenger loads (revenue) are carried, the range being more than sufficient. Other customers for the E190/195 include leading firms like Air Canada, Jetblue, COPA Panama, Air France Regional and Aeromexico Express, with Lufthansa having 30 on order. Airbus and Boeing however have the advantage of larger planes in the same family, which increases crew flexibility and cuts technical costs. Commonality weighs heavy, financially, in small fleets.

Back to Belfast. While already benefiting from MIA’s generous rebates system, it might be included in a government or MTA support scheme, but not expecting a too high frequency. A seasonal service should be welcome.

Easyjet has no flight anywhere as long as the Malta sector, other destinations more likely relate to development priority.

Dublin is only 150 kms away from Belfast, though at least a non-Schengen border obstacle is in between, with year-round Ryanair flights plus one to two weekly charter flights in summer, one Air Malta, one varying charter firm. One should not endanger these flights. Ryanair’s Ulster airports Derry and Belfast City, very practical for short flights, have too short a runway to operate at full passenger load plus fuel to Malta, a place of incomparably higher real estate value (opportunity cost for land), where the secondary runway is also much longer.

Irish flag carrier Aer Lingus has a base at Belfast International. The southern destinations linked are sun/sea/sand places in Portugal and Spain, plus Rome, which are nearer and more popular.

So it might boil down to a once or twice weekly Air Malta or British leisure carrier flight combining flight-only sales and tour operator contingents. Counter stand high fuel costs/longer sector, plus an uneven playing field with a highly subsidized competitor in the wider region.

Still, one operates once-weekly seasonal Dublin charters against subsidized Ryanair. Air Malta has long-time UK tour operator contacts and spends tons on advertising in national media, and if one runs scheduled flights one could also sell some remaining seats online at no extra marketing cost. Even a combi with Glasgow might be considered.

Advertising

Particularly for less frequented markets, if one sells a good share of the seats via tour operators, there is no need for any expensive local advertising (billboards, radio spots). For the carrier, nationally focused Internet and popular/relevant marketing, supported by regional marketing in the core catchment areas but then only around the most highly frequented airports, can indeed be a good addition, particularly if paired with the MTA due to congruence of interest.

Even so, the advertising cost for destination area carriers is naturally disproportionally high compared to the local source-area carriers: a destination area carrier can only promote its destination and one, three or seven flights per week, while locals operate dozens per day to various places. Hiring a billboard, ordering a radio spot or a newspaper advert costs the same irrespective of whether one has one or 30 flights per day, so cost-return ratio is totally different, let alone for gigantic budgets required to sponsor something like Formula One or football teams. Anyway, this is not for airlines but for enterprises with a different product (associated with sport, e.g. football sportswear/TV sets/beer/ betting/pay-TV/mobile video) and/or of very different financial dimensions. For Air Malta, inexpensive but effective e-marketing, joint special advertising with MTA, and code-shares have proved to be the right way.

But one should also not scare off tour operator contracts, which maybe sometimes are a bit lousy on profit margins at first glance, but also require no expensive advertising: less cost. Tour operators market nationally via own adverts, via websites, and catalogues distributed to travel agencies – both classic marketing measures, local and national, and e-marketing. Continuously trashing out large quantities of seats at prices below what tour operators pay at the same airports is somewhat risky, not that one ends up with smaller routes where tour operator traffic is crucial in the mix having to cease. Tour operators take longer-term bulk commitments, provide a full range of distribution channels and also sell flights online, in Germany since the 1980s particularly with Air Malta. The current market environment makes hitting the right mix between one and the other without neglecting either certainly a very difficult issue requiring constant calibration.

While Heathrow and Manchester have a good location for hubbing with the British Isles, for the rest of the EU Germany as the EU’s geographic centre is much better located, with the two Lufthansa/Star Alliance hubs in Frankfurt and Munich: much nearer to Malta, hence less cost. While it is positive that Germanwings has withdrawn the parallel flights from Cologne (35 kms on the autobahn from Düsseldorf) in winter, it would have been nicer if for the coming summer it would not return. Now what a statement!?!

With no disturbance from Cologne, Air Malta could then financially stabilise Düsseldorf with more point-to-point volume providing a stronger basis for a third German hub. If Germanwings stops Cologne-Malta, Air Malta could still return to Cologne (it ran, interrupted by carriers no longer existent, since the 1980s until the autumn before Germanwings) provided a Düsseldorf slot problem, but would then keep the right balance. They could then further develop the Lufthansa-code share operation for Düsseldorf and optimise the Cologne point-to-point travel operation onto periods when demand can really take it, rather than crowding out and making Düsseldorf flights deficit and destroying the potential of the route to be a hub for Malta. The code-shares from Munich and Frankfurt have proved very successful for Malta’s tourism (and the carrier of course). Adding a strong system at Düsseldorf could optimise flows, timing already of present flights being optimal. Germanwings in turn could further expand Stuttgart: lower trip costs, high purchasing power area, and bilateral business traffic with many German-Maltese enterprises from the Stuttgart area.

But while Air Malta operates more flights from Berlin, surrounded by the emptiness of Brandenburg, both no prosperous states, Germanwings is unable to run even two flights from Stuttgart, the centre of Germany’s most prosperous state Baden-Württemberg, almost an hour nearer to Malta. Air Malta should try to snatch the Stuttgart summer tour operator business away from Germanwings, which would make the route unviable for them, and take that airport itself. Even if revenue were lower, trip costs are too. One should also not forget the corporate/conference and IT travel that Air Malta caters for more than others do.

For Switzerland, a code-share agreement with Swiss for Zurich is overdue. Hard to understand that Air Malta also has no Austrian Airlines code-share, and this with MIA partly owned by Austrian’s home airport Vienna.

But in Germany Air Malta has taken a more careful approach as regards advertising budgets, which is the major market where they are most successful. This is because there are the right distribution channel mix and the best airport concepts, and is worth another discussion anyway, while the Alps countries were discussed in The Malta Independent on Sunday of 13 January.

Scotland

Glasgow, Scotland’s biggest city, has had Air Malta flights for a very long time. In the early 1990s, they switched from charter to scheduled flights. What was the development over the last years?

While in winter it was only Air Malta that kept the route open with two flights or three (in winter 06/07, two were combined with Newcastle), the last summers looked like this:

2004: twice weekly Air Malta, once weekly by Britannia and My Travel Airways

2005: twice weekly Air Malta, once weekly by Britannia, MyTravel, and Britishjet

2006: twice weekly Air Malta and Britishjet, once weekly My Travel Airways

2007: as 2006

2008: twice weekly Air Malta, once weekly Thomas Cook Airlines

Thomas Cook Airlines also sell flight-online at very competitive fares, using a 210-seat Boeing 757.

The developments regarding Air Malta in Glasgow probably has a mix of causes:

• higher trip (fuel) costs

• lower revenue (trash fares)

• higher marketing costs

• competition from other destinations

• tour operators losing interest

• economic factors (cost-of-living: fuel for heating and cars) negatively influencing the British consumer market in general.

Filling a flight and filling it profitably, or at least generating enough revenue to cover variable costs, are two different things.

One weekly flight, even as charter combi (no problem buying flight online for Scottish residents from tour operator bulk contingents), should however be kept to remain present in the market.

And other airports?

In the 1990s, Edinburgh was linked by Air Malta as serial charter, discontinued now for many years. Should Air Malta retain its new strategy with a longer perspective (that is, not just for the coming winter), a re-orientation might become necessary.

Edinburgh and Aberdeen

Edinburgh has long been an Easyjet base but none of their flights is anywhere as long as a Malta sector and so one might be sceptic.

Ryanair’s new Edinburgh base concentrates on the guest-worker/pub-crawl flights (Poland), outgoing tourism to the western and northern Med (nearer than Malta), and incoming tourism from Germany. But from Glasgow-Prestwick (50 kms south of Glasgow), Ryanair also flies to the Canaries, which is further away than Malta. But then there are their well-known methods towards places becoming dependent on them and/or being ‘disobedient’.

What could happen is Edinburgh declared a ‘new area’, even though it is not that far from Glasgow, the two cities being 90 kms apart on the motorway (hence Air Malta’s policy of concentrating on the more important Glasgow). If Glasgow is sufficiently connected, it is unfair. But if Air Malta already knew that next summer it would run exclusively with BMI feeder, then maybe offering subsidies for Edinburgh, dormant for a long time, could be a way out. Add oil city Aberdeen, seasonally, once weekly.

Air Malta should have a genuinely fair chance for any eventual incentive programmes too. Having no direct winter link from Scotland and maybe a single summer flight is insufficient.

FlyGlobespan

FlyGlobespan could be an interesting partner. The Scottish airline not only operates as low-cost carrier in the flight-only segment but, contrary to Ryanair and Easyjet, has a background in the tour operator business. The carrier has bases in Glasgow, Edinburgh and Aberdeen, and from all three operates to e.g. Cyprus, except for Aberdeen, even year-round. While Cyprus is very popular in Britain, surely it would not be impossible to operate a service to nearer (lower trip cost) Malta, from one or both main airports year-round, seasonal from Aberdeen. In summer one could run twice weekly from Glasgow and Edinburgh each, plus once weekly from Aberdeen, and in winter either once weekly from both Glasgow and Edinburgh or twice weekly from Glasgow. Edinburgh and Aberdeen would anyway get MIA’s rebates plus what could be declared ‘new area’. FlyGlobespan should get the same support that Ryanair got even for simple parallel flights (London, Hamburg-Bremen).

For development programmes one should ask for a frequency of three or four flights per week, not from one airport, because it would not work, but from a mix of all Scottish airports, and let the carrier decide from where/in what combination: maybe four to five flights in summer and two to three in winter. Adding FlyGlobespan would even further diversify Malta’s UK low-cost carrier portfolio, recognise Scotland’s value for incoming tourism, and expand the sourcing map from one to three airports. Furthermore, there might be a fourth airport opportunity.

Durham Tees Valley

In northern England, Newcastle has a summer charter, once weekly, this year Excel Airways. In summer 2006 one had extreme overcapacity with twice weekly Britishjet, once weekly MyTravel, once weekly Air Malta (combi).

A service from Durham/Tees Valley (formerly Teesside) could be an option.

While Ryanair has no base there and a minimal route portfolio, FlyGlobespan has a base linking more places than any other carrier. Maybe one could integrate this airport into a large north Britain packet: twice weekly in summer, maybe once in winter.

The area north of Newcastle is very thinly populated. Durham/Tees Valley is just 50 kms away on the motorway south of Newcastle.