And then there are also flights with just 40 to 50 passengers, see article in The Malta Independent on Sunday of 1 November 2009 entitled “40 passengers on an Air Malta flight” referring to an Amsterdam-Malta flight. And it is not only since the grand recession: back in January 2004, an Airbus A320 bound for Palermo bumped into a lamp-post, had just about 30 passengers on the 170-seater.
One has A319s regularly flying combi flights, which means there are routes with a demand of probably fewer than 70 seats each, permanently. Combining is certainly much better than flying with two 140-seat jets and with just say 40 or 50 or so passengers aboard. But one has to add cost for the flight between the two airports combined. This is acceptable if the places are near (say Hamburg and Leipzig, or Leipzig and Prague, or Vienna and Budapest), but if further apart, it is not so great.
On the Internet there are cabin photos taken on flights with worrying load factors, before the recession and with Internet sales and trash fares during the summer.
So it could be an option, if one does not have a general 120-seater core standard for maybe a 90/120-seater fleet as core, to at least flexibly deploy a 50-seater jet.
A 50-seat plane, such as the Embraer 145, when bought completely new at full list price, and if just comparing fuel burn on the theoretical per seat basis, does not have particularly good unit costs. But for a young, second-hand jet acquired during an economic downturn, this changes because of low capital costs. And where Air Malta is concerned, of what help are low unit costs when many – too many – units (seats) remain empty so generate no revenue, not to mention profit?
Currently, the E135 (the shortened version of the E145) with 37 seats, is available for around e4 million in the USA, with just 20,000 hours and a good 10 to 15 years of life in it, for sure. Just assuming running one for 10 years and then valuing it at zero, and calculating 330 operational days per annum, this means a depreciation of around e1,200 per operational day.
Anyway, the 50-seat E145 is a bit larger and costs more than an E135, but not dramatically. If just one plane is deployed on only one each 500, 1,000 and 1,500km return sector per day, be it flexibly underloaded or chronically underloaded, 11 tons of fuel would be saved per day, far more than the capital cost for the entire extra jet – and add incomparably lower airport and navigation charges and two less cabin crew. Another 50-seater jet available at a low price is the Bombardier CRJ200, and while EU examples often have cabins that are not so appealing, the US jets usually have better style. However, generally, the E145 seems better.
Generally, where maintenance is concerned, Malta is one of the big profiteers in the EU of carriers in Europe, Africa and the Near East, outsourcing maintenance work. So if Air Malta has to outsource some work that should also be acceptable. Embraer in particular, together with engine manufacturers Rolls Royce (E135/140/145) and General Electric (E170/175/190/195), are offering cost-effective maintenance solutions for small airlines, where carriers are provided with replacement parts instead of building up their own inventory, thus reducing costs.
So either one simply stops underloaded routes and frequencies completely, or – at least partly – re-models the fleet with the 90+120 seater at 20-30 per cent lower costs for equal revenue/passenger volume, while also reducing the risk bar for additional frequencies or destinations that can only increase traffic, or one at the very least uses a wet-leased smaller jet flexibly when needed.
The Airbus A320 can still make sense on routes/frequencies that regularly achieve very high loads and these are also profitable when one can carry significant cargo that contributes financially, and also for the growing smaller serial contract charters, provided tour operators take over the marketing/risk. But generally, for the normal loose cargo, the E195 should do the job as well.
Malta-UAE via Germany
Another thing not exactly ‘eco’ is offering passengers to travel between Abu Dhabi and Malta to fly via Frankfurt (ToMB, 30 November 2009). Emirates offers the daily direct flight between Malta and Dubai, stopping in Larnaca in Cyprus (the western sector is actually code-shared with Air Malta). Dubai is a mere 120kms of road away from Abu Dhabi (centre to centre).
Notably, in some more relevant tourist source markets, Air Malta expects people to drive way longer distances to directly linked airports, or even airports for just a feeder flight.
For developing links to the Near and Middle East, why not develop a code-sharing agreement with Star Alliance member Egyptair, which runs between Cairo and Malta? As pointed out since early 2007, a Tel Aviv link is missing.
Connections
Then one has some ecologically and also time/money-wise somewhat unconventional connections (change of planes) on sale.
Some examples from the German-speaking area:
Nuremberg to Malta via Munich or Frankfurt, six to seven hours, with Munich, linked with up to three daily flights (hopefully this is not overkill) just 150kms down the autobahn. On the other hand, the connection from/to Hof-Plauen via Frankfurt is comfortable for passengers from the real north-east of Bavaria who for some reason need to travel on days not covered by Leipzig, only 130kms of autobahn away, as Munich is 270kms away.
Basel to Malta via Frankfurt or Munich: fly first one hour north, go through Frankfurt transit, to then again overfly Basel southbound, or go to Munich, when one has a daily link from nearby (100kms of autobahn or Swiss public transport) Zurich… same goes for Bern via Munich.
Cologne to Malta via Munich takes four hours more plus extra cost than just driving the 30kms to Dusseldorf with its basically daily service, not forgetting Frankfurt (double daily) as an alternative for part of the catchment area. Better if Air Malta had a twice-weekly link, say Thursday and Sunday for summer, blocking the airport off before someone else takes it.
Add some Austrian cases.
One wonders who will fly from Turin to Malta, change planes in Catania, for e400, when one can go non-stop from nearby (120 kms motorway) Milan-Malpensa, with Air Malta and easyJet for possibly e250 less per person, or if any tourist will fly from Madrid to Malta via Frankfurt, taking up to nine hours and costing from e300-450 with non-stop Ryanair flights.
Certainly there are also good connections, like the US ones, as well as the Scandinavian ones, or all those for non-operating days, so maybe promote and further develop such at this point.
Good direct connections however remain crucial to keep destination Malta interesting, because most potential tourists from markets like Italy, the Alpine countries, the west continent, and the British Isles for intra-EU prefer a non-stop flight to connections and either there is a direct flight, or one goes elsewhere.
And direct flights are important for keeping tour operators interested too – even if people do not order a traditional inclusive tour but buy the flight separately, and just buy the accommodation from the bulk contingents of the tour operators, no problem also online. Tour operators broaden distribution and advertising channels. easyJet has teamed up with a key Malta operator in Britain (Chevron) even for traditional inclusive tour packages, competing with a quite better price than Air Malta for this traditional market. Tour operators are not dead, provided they adapted to the Internet age and sell both traditional packages and components. FTI for example helps tourism from Germany, and also sells components online too. Their relevance certainly differs from country to country.
The level playing field
So, while one should appreciate all CO² saving efforts undertaken by Air Malta, before speaking about revising the design of catering trolleys or, as the acme, implying that customers could maybe pack a kilo less, clearly Air Malta could potentially save way more fuel/money otherwise. Add possibilities on the ground.
New route developments, possibly aided with fat subsidies, should be only on genuine route additions and not simple parallel flights. I have often enough mentioned both negative and positive examples with regard to the latter, not few of which had, coincidence or not, been suggested in articles by yours truly to a certain extent quite some time before they were taken up (like Bournemouth, Madrid, Edinburgh, Cairo, Bologna, Bari).
The leases
But certainly it is also an issue how on earth to keep the not small number of 12 140/170 seaters occupied year-round. Leasing bills have to be paid for still many years to come, and one did not (or could not?) take the opportunity to sublease them out for real very long-term (or total pass-on) contracts (fixed and insured) when there was still a high demand for such capacity on the world market despite the problem already being evident. Then one could already have made a good arbitrage between the lease rate one had got in 2002 when the contract was made for deliveries 2004-2007 and for what one could have passed these leases on. From this arbitrage profit one could have leased/financed other planes with lower fuel burn and more realistically adjusted to demand, so one would have had very low capital costs thanks to the significant arbitrage contribution plus additional lower fuel costs.
No new problem
Because the load/profit problem is not a new one for Air Malta, which, one should not forget, during its first 20 years was very profitable. The problem has been brought on by an unlevel playing field artificially created on some routes (Hamburg-Bremen or London), the oil price shock, the return to Malta of capacity after the XL collapse, and the economic crisis in source markets, and that one now has the fleet strength of summer on a year-round basis.
Some time ago (date quoted later on) I had already discussed the issue of insufficient load factors and the need to re-adjust the fleet either with at least a turboprop for regional routes (ATR 72, Saab 2000 or Bombardier Q400, operated externally e.g. even by local Medavia), or in general an Embraer 170/190 series mix to at least supplement some A320s that would remain on trunk routes, with all the rest posted abroad or leased out, quote:
“The 168-seat Airbus that hit a light pole in January carried 30 passengers: that a 140-seater had originally been scheduled makes no real difference, if neither the cargo hold nor the return flight were fully booked. It stands to reason that a turboprop airliner of, say, 50-75 seats operates more economically (and ecologically) than a jet of 140 or 170 seats under such circumstances, a load factor hopefully (but really?) a very odd case out, commonality factor yes or no.”
“Fares might be lowered, or losses reduced, or both. Smaller capacity planes can lead to higher frequency; a great plus for the consumer.”
“Another option could be Embraer 170s or 190s. Embraers could operate any flight, be it to Catania or St Petersburg. Excess Airbus capacities might be transferred to an Air Malta base abroad or leased out.
Advantages are high flexibility to demand, interchangeable as regards block times and continental range, and apparently the Embraer 190’s unit costs roughly compare to those of the A319’s. US low-cost-carrier Jetblue placed 100 firm Embraer 190 orders plus options, complementing its A320s on lean sectors.”
So, if one would just presume one could, over a 12-jet fleet, save only just 7t of fuel per day per plane on average, one already has 84t of fuel per day – over a year circa 31,000t of fuel. The fuel price around Christmas 2009 stood at 672 USD per ton of fuel, so circa e480. It was higher before as we all hear. But even at this price one would already have circa e15.5 million less on the fuel bill per year. Add to this quite lower airport and navigation charges, plus lower capital and possibly maintenance cost, again, at equal revenue, same flights, while opening more opportunities to develop new revenue through new additional routes while making hub frequencies more robust.
Today, Jetblue, which flies with a fleet mix of A320 and E190 (a bit smaller/shorter than the E195) in the USA of 2009 with all its many problems, last October reported a profitable quarter, a third consecutive one, at operating margins of circa 6-8 per cent. Sure, large fleets mean economies of scale, but they also have plenty of staff, and one know the problems of the US.
Royal Jordanian has a fleet of E175/195s (7; 3 further E195s on order through leasing), A319/320/321s (4+6+2), A310s (two cargo, three passenger) and A340-200s (four) plus an externally operated older B737 for most Iraq flights. Jordan indeed is Ryanair-free area, which definitely helps a lot, but then for other reasons is certainly not an easy region, with long, fuel-intensive sectors, a not too big fleet with four types and plenty of staff, and they fly at a profit.
Virgin Blue (Australia) with a combined E170/190 plus B737-700/800 fleet is profitable.
FlyBE, with its mixed Q400 and E195 fleet and biggest intra-UK carrier, during the fuel crisis, reportedly claimed to be able to break-even until a fuel price oriented on a barrel price of US$160.
An option for beyond 2016-2018 could certainly be the new Bombardier C-Series with its new generation of engines.
Before I forget, the quoted above article from yours truly was from STOM, 11 July 2004.
That was five-and-a-half years ago.