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Malta aviation: Air Malta, Ryanair and now Malta Air

On 11-Jun-2019 Ryanair announced an agreement to buy the start-up airline Malta Air and use it to operate its low cost operations in Malta. Ryanair has already transferred its six Malta-based Boeing 737-800s to its new subsidiary's AOC, although they will not be branded under Malta Air until summer 2020.

The deal was done with the support and cooperation of the Maltese government, which wanted to solidify Ryanair's ties to the country.

This has caused some to question the future of the flag carrier Air Malta, which is owned by the Maltese state. Although the legacy airline reported a profit for the year to Mar-2018, it had struggled with profitability over the past decade, in no small part due to competition from Ryanair. 

The Maltese government has said that there is room for both airlines, operating different business models and networks.

Summary

  • Malta seat numbers are to double in 2019 versus 2012.
  • Ryanair is the leading airline by summer seats in Malta, having overtaken Air Malta in 2015. It also has more routes and annual passengers.
  • Destinations in Europe dominate Malta's schedule. Air Malta leads only on routes to North Africa and Middle East.
  • Ryanair has transferred seven aircraft to the Malta Air AOC; its new group strategy increases flexibility over labour and brand.

Malta seat numbers to double in 2019 versus 2012

Malta is the third largest European island aviation market after Cyprus and Iceland (following the demise of WOW air in Mar-2019, Malta could possibly jump ahead of Iceland in 2020). Air transport is, therefore, vital to its connectivity.

See related report: European islands: high volume of air travel and a variety of airlines

Annual seat numbers to/from Malta reached 8.3 million in 2018, which was a 16.8% increase on 2017. Over the past seven years growth rates have varied, but have not been lower than 5.3% (2015) and in fact rose as high as 21.7% in 2017.

Schedules data from OAG indicate that capacity growth will be approximately 7% in 2019, the slowest rate since 2016 but still a strong increase compared with global growth expected to be more like 5%.

This year's capacity of 8.8 million seats is twice the 4.4 million of 2012.

Malta: annual seats, 2012 to 2019*

 

Ryanair is the leading airline by seats in Malta

Based on OAG data for the week of 26-Aug-2019, the summer peak, Ryanair is the leading airline in Malta, with 32.3% of seats. However, it is only fractionally ahead of Air Malta, which has 32.1% of seats in the same week.

The two are each far ahead of number three easyJet, which has 5.9%, and fourth placed Wizz Air, whose share is 5.3%. Lufthansa is the biggest non-Maltese, non-LCC airline, with 4.5% of seats, followed by Emirates with 2.5% and Turkish Airlines with 2.2%.

The top 10 is completed by Jet2.com and Alitalia, each with 2.1%, and Vueling, with 1.2%. There are a further 17 airlines with a combined share of 9.9%.

Malta: top 10 airlines, week of 26-Aug-2019

Rank

Airline

Seat share

1

Ryanair

32.3%

2

Air Malta

32.1%

3

easyJet

5.9%

4

Wizz Air

5.3%

5

Lufthansa

4.5%

6

Emirates Airline

2.5%

7

Turkish Airlines

2.2%

8

Jet2.com

2.1%

9

Alitalia

2.1%

10

Vueling

1.2%

 

All others

9.9%

Air Malta had the biggest seat share in 2015

The two leading airlines in Malta have tussled for the top spot in terms of seat share for several years.

Again using the week of 26-Aug-2019 and equivalent weeks of prior years, they will have swapped the lead three times since 2015.

Back then, Air Malta had a distinct lead, with a 36.6% share versus Ryanair's 22.3%, but Ryanair took a small lead in 2016, before losing it in 2018 and regaining it (just) in 2019.

Malta: seat share of Ryanair and Air Malta (%), summer schedule 2014 to 2019*

 

Ryanair is now noticeably larger by routes and passenger numbers

Although Ryanair and Air Malta have a very similar share of seats to/from Malta in the peak summer week, Ryanair's annual operation is more noticeably the larger of the two as it is less seasonally skewed.

In the week of 26-Aug-2019 Air Malta operates 43 routes from Malta and Ryanair operates 62. In the winter week of 9-Dec-2019 Air Malta will operate 25 routes, versus Ryanair's 60.

OAG data indicate that Air Malta will deploy 2.9 million seats in 2019, compared with Ryanair's 3.1 million.

Ryanair has said that it carries 3 million passengers a year in Malta. Although it does not say which year, this is likely to be a recent figure.

Air Malta carried 1.7 million passengers in the 12 months ended Mar-2018, when OAG data indicate that it operated 2.2 million seats, implying a load factor of 77%. Assuming the same load factor suggests 2.2 million passengers for calendar 2019 – still considerably less than Ryanair's total.

Malta's LCC seat share has doubled over 10 years

LCCs have a combined 49.3% seat share in the week of 26-Aug-2019 and 50.8% for the first seven months of 2019.

This compares with 48.4% for all of 2018, which was very slightly lower versus 2017's figure of 48.9%, the only year in the past decade when LCC share has fallen.

On a 10-year view, LCC share of seats in Malta has doubled from 24.7% in 2009, according to data from CAPA and OAG.

The dip in LCC share in 2018 was caused by Air Malta's strong growth in 2017 and 2018. It grew seats by 21.7% in 2017 and 16.8% in 2018, after mid single digit growth in the three years 2014 to 2016.

Ryanair is by far the biggest LCC in Malta, but easyJet, Wizz Air, Jet2.com, Vueling, Volotea, Transavia France and Norwegian also serve the island.

Destinations in Europe dominate Malta's schedule

Scheduled capacity to/from Malta is entirely short/medium haul and dominated by destinations in Europe, which account for 96.8% of seats (Western Europe 80.3% and Eastern/Central Europe 16.5%) in the week of 26-Aug-2019.

Middle East accounts for 2.1% and North Africa for 1.1% of seats.

Malta: departing seats by region, week of 26-Aug-2019

 

Out of a total of 119 routes in the week of 26-Aug-2019, there are 113 to Europe and only three each to Middle East and North Africa.

Since the equivalent week of Aug-2016, when there were 79 routes in total, the number of Europe routes has grown by 36, whereas route numbers to Middle East and Africa have each grown by two.

Malta: number of routes by region, summer schedule 2014 to 2019*

 

Air Malta leads on routes to North Africa and Middle East

Air Malta has an advantage over Ryanair on routes to North Africa and Middle East, although services to these regions are dwarfed by those to their main battleground of Malta-Europe.

Air Malta is the leading airline on Malta-North Africa, which Ryanair does not serve. In addition to competing with Tunisair to Tunis, Air Malta is the sole operator on Malta to Casablanca and Cairo. Ryanair's acquisition of Malta Air offers the potential to develop its North African network.

Qatar Airways is the leading airline on Malta-Middle East, thanks to its monopoly Doha service, launched in Jun-2019. It is followed by Air Malta, which serves Tel Aviv as the sole operator and has more than twice the capacity operated on Malta-Middle East by Ryanair (whose only route is to Amman, launched in Apr-2019).

There are no others apart from these three on Malta-Middle East.

Ryanair has transferred seven aircraft to the Malta Air AOC

According to the CAPA Fleet Database at 26-Jun-2019, Ryanair has transferred seven Boeing 737-800s (all manufactured in 2017 or 2018) to its new subsidiary Malta Air.

These transferred aircraft include all six that formed Ryanair's fleet at its Malta base.

These six aircraft will be rebranded under Malta Air livery by summer 2020 and will be joined by at least four more within three years. Ryanair is also transferring 200 Malta-based crew onto local contracts and to create more than 350 jobs with Malta Air.

In addition to the Malta Air branded fleet, Ryanair plans the gradual transfer of aircraft from its fleet based in France, Italy and Germany onto its Maltese AOC. It plans at least 50 Maltese registered aircraft over time, although the majority will not be based there.

Ryanair's new group strategy increases flexibility over labour and brand

Ryanair's evolving group strategy, comprising a growing number of subsidiary airlines, could bring a number of potential benefits.

See related report: European airline group structures: Ryanair – cloning IAG

Among other things, it appears to be aimed at increasing its flexibility in two important areas.

One is labour relations and costs.

The establishment of separate operating subsidiaries provides Ryanair with alternative vehicles for its negotiations with unions.

In addition, the Maltese AOC now gives it flexibility for crews operating Maltese registered aircraft "to pay their income taxes locally in France, Italy and Germany instead of Ireland where they are currently required to pay income taxes under the group's Irish AOC". Presumably, they can also pay their taxes in Malta.

The second is in branding.

Ryanair has been very successful in growing to be Europe's largest airline by passenger numbers with just one brand. However, and in spite of its Always Getting Better programme of customer service improvements, not all travellers are enamoured of its brand.

The new brands Lauda (Austria), Buzz (Poland) and now Malta Air are largely free of associations with Ryanair and give flexibility to grow in any part of Europe where the parent brand may meet obstacles.

Malta's connectivity is secured by Ryanair's Malta Air deal

Until now, Maltese aviation has been a near duopoly between a struggling national carrier whose future has often looked precarious and a foreign, very profit-focused LCC with no commitment to Malta other than to make money there. The exit of one or the other would seriously damage the island's connectivity.

The Maltese government has now given itself options should Air Malta falter in its turnaround from long term losses. Ryanair has increased its flexibility around both labour and brand.

For Malta, if not for Air Malta, Ryanair's acquisition of Malta Air should be positive for its connectivity and tourist traffic.

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