As The Malta Independent on Sunday reported on 22 June, the Maltese embassy in Copenhagen is working to improve tourism to Malta. In the following article, some possible scenarios are discussed, particularly in view of route development.

The Danish economy

The Danish krone is 100 per cent pegged to the euro (under ERM II). Danish state debt rate stands at only 30 per cent of GDP, even though the 2009 deficit is expected to be only -0.5 per cent (German-Danish CoC data). Unemployment remains comparatively low, and disposable incomes are even expected to grow by four per cent this year.

With strong renewable energy technology and biotech industries, it might not be so badly affected like countries focused on financial services and real estate. Incomes are rather evenly distributed.

Danish tourism to Malta

There has been a solid but quite sluggish flow of Danish tourists.

The traditional image is tourists arriving by Danish charter, transported to Ghadira, and back. Yet today, tour operator Dansk Folkeferie also markets a holiday complex in Mellieha, a four-star hotel at Sliema Ferries, and one five-star hotel in St Julian’s.

Flights are from Copenhagen and Billund (central mainland Denmark), currently operated by Danish charter carrier JetTime. Formerly, it was mostly Sterling, which also was a charter airline that collapsed after some years of low-cost hybrid, and re-launched by regional Cimber Air as Cimber Sterling. For a short time, SAS/Snowflake and Maersk Air, both no longer operating, also ran.

Air Malta once flew to/from Copenhagen but gave it up long before the fuel crisis. It could have been a result of new competition, but it could also be that the Danish tour operator(s), somewhat a ‘closed circle’, just gave no contracts. And without these it is very difficult, also today, let alone when the Internet was in its infancy. Air Malta, facilitating/encouraging new tour operator entrants, and also selling tickets individually on scheduled flights, means potentially opening up Malta to additional tour operators – not amusing tour operator monopolists.

Because apparently, Folkeferie is the sole IT operator, as none of the tour operators who contract JetTime offer Malta. But DFF is also one of the longest-serving Malta tour operators. Its facility has rather a low impact. Recall what happened with Hal Ferh, Mistra Village and White Rocks. DFF stands for continuity. But diversification of tour operators and some individual travellers could help expanding, while, if carefully developed, not colliding with DFF’s core business.

Connectivity

Currently, apart from May-October weekly JetTime charters (Billund, one plane, Copenhagen two planes 144 seats each), there are Copenhagen connections via Frankfurt, Zurich, Munich, Heathrow or Brussels, with Frankfurt and Zurich transits priced competitively and fast. Billund connects via Frankfurt and Munich. It’s very clear: no messing around with hub flights.

Air Malta is the biggest Malta-focused low-fare airline, yet it is also open to tour operators. If it could get the contracts, it could enter on both Copenhagen and Billund, throw JetTime out, and add some extra capacity, like three Copenhagen flights instead of one or two in summer, of which one could be a Billund combination added to a single Billund non-stop run, while for winter offering for example, one A319 non-stop on the strong day for Copenhagen and half an A320 as a combi flight divided between Copenhagen and Billund.

With efficient 90-120 seaters such as the Bombardier CRJ900NG or the Embraer 175/190/195, which offer way lower trip costs than an Airbus (the large Embraer is 20 per cent lower) while in practice generating equal revenue (seats sold), or temporarily, Fokker 100s (ACMI lease), reluctance about new routes or keeping some open longer might be lower.

Anyway, in winter JetTime carries roughly 80 passengers per flight in a 140-seat plane – if there is a flight at all. With an Air Malta ‘triangle’, tour operators could have one full 170-seater A320 instead of two half empty 140-seaters, which means way lower costs, equal volume/revenue, more competitive prices, and maybe higher frequency.

However, it could be that if more tour operators get interested in Malta, JetTime surely would not mind putting on more flights from Copenhagen and Billund.

CimberSterling from both Billund and Copenhagen could be an interesting choice. Sterling had a long Malta tradition; today it sells flight-only seats and is a well-established brand.

SAS could run from Copenhagen, but has many other worries.

LCC Norwegian dropped Malta after just one season (2008 summer starting from spring) on the Oslo route, for which it was ‘hailed’ as better than the on average quite cheaper Air Malta, which had run the route many years for most months of the year right until the take-over, supplemented during summer by Braathens/SAS Norge. This summer there are zero regular charter or scheduled flights, as Air Malta after all was kicked out, SAS moved their flights from Oslo to Stockholm, where they just replaced the equal number of flights as a leisure carrier had to pull out. But Norwegian is an established brand and has interesting connections.

Another scenario: while Air Malta takes Copenhagen, Ryanair runs two Billund flights. The route can work without problems and also without base at either ends, as a plane from e.g. Trapani could hop to Malta, fly to Billund, back to Malta-Trapani, or something accordingly up north.

And in Billund, additionally at least half a run with Air Malta for tour operators might still survive. Certainly one could also lose the charter/tour operator completely, whereas with JetTime, CimberSterling or Air Malta expanding this field. Generally, in the end Air Malta could run Copenhagen, a Star Alliance north hub.

Sourcing also in north Germany

But one hardly has winter flights from Billund, so a seasonal plus. It could hit the Hamburg route given that Billund also sources the northern German state Schleswig-Holstein, which is Hamburg-Fuhlsbüttel catchment area, but not damage yields as much as the highly subsidized Hamburg-Bremen parallel flight.

What has to be ensured is no major damage to DFF. The problem is not the potential loss of a replaceable charter airline, but that of a very reliable tour operator monopolist.

Ryanair is a foreign private enterprise that consists of just airplanes, hence highly movable assets – a stark contrast to a static real estate object like. an airport. They move out if they do not get the, well, ‘embraces’ demanded. So growth with them should focus on where they are strong while no others would run; I have given many examples at earlier points, some taken up (like Madrid as a seasonal addition also for next winter, Bari and Edinburgh).

Luggage

Another challenge for tourist destinations with longer flight times is Ryanair’s reluctance with regard to checked luggage, which Ryanair recently stated could be totally banned from next spring. Already today, while a 20-kilo suitcase is included with low-fare carriers Air Malta and Easyjet, ‘low cost’ Ryanair wants a rip-off e190 per standard 20-kilo suitcase return.

This is no problem on very short (time and distance-wise) trips, and today 70 per cent of their passengers fly without checked luggage. Such trips mean relatively few bed nights. But average tourists do not first spend hours to get from home to boarding to then fly three or four hours to Malta, only for a one or at maximum two night stay, let alone would opt for Mellieha or Bugibba, let alone Gozo.

Diversification

As I have always argued, a diversification into more source markets rather than just a very few is important to offset risks of regional slowdowns. Improving the Danish market is the right step.

Finally, et ceterum censeo: the Tel Aviv route remains missing. What is hindering this is not understandable.