Issue link: https://maltatoday.uberflip.com/i/1515420
MATTHEW VELLA mvella@mediatoday.com.mt 9 NEWS maltatoday | SUNDAY • 4 FEBRUARY 2024 MALTA'S Central Bank has backed a new aviation strategy to have Air Malta's successor service 17 routes to important hubs that can provide connec- tivity to the rest of the globe. In an analysis of airline con- nectivity in the post-COVID economy, the Central Bank said that with Malta's size and population making long-haul routes unprofitable and unsus- tainable in the long run, it was crucial to rely on indirect con- nectivity from large airports that serve as a gateway to the rest of the world. "Whilst the new airline will in fact restrict its route offering, by retaining connections to the largest airports in Europe, the airline is still offering strong secondary connectivity to all continents," the report by sen- ior economist Kurt Sant says. Sant writes in his analysis that the overall impact on connec- tivity from the downscaling of Air Malta routes appears to be minimal. A new national airline, KM Malta, replaces Air Malta as of 31 March 2024 following an agreement reached with the European Commission to op- erate a standing fleet of eight Airbus A320 aircraft, while sig- nificantly cutting costs, mainly wages, and boosting seat load factor to aim for profitability in 2025. The new airline aims to offer 284 weekly flights – 82 of these weekly flights will service Ita- ly, 48 to France, 44 to the UK and 40 to Germany. The strat- egy of the new national airline will be a drastic departure from Air Malta's strategy in the pre COVID-19 period: back then, Air Malta expanded to new countries and airports, while the new airline will serve main- ly profitable routes. Although passenger numbers in 2023 have surpassed those in 2019, Malta's air connectiv- ity remains below its pre-pan- demic levels, with connections to seven countries having been severed, especially in North Af- rica and the Middle East. "In 2024, the new national airline replacing Air Malta will cut back further on its desti- nation offering. However, due to the availability of indirect connections and the presence of alternative airlines, Malta's overall connectivity is not ex- pected to be severely impacted. However, this does result in a less competitive environment on certain routes and coun- tries, which may hurt consum- ers," the CBM analysis says. In fact, from up to 43 direct connections offered to passen- gers in 2019 Air Malta halved its connectivity to 22 airports in 2023. In addition to this downsiz- ing, the new national airline will reduce six further connec- tions in 2024, concentrating its operations on 17 of the profit- able routes currently operated by Air Malta. However, five routes – Rome Fiumicino, Mu- nich, Paris Charles-de-Gaulle, Zurich and Vienna – will expe- rience increased flight frequen- cies. "Thus, compared to 2019, the national carrier in 2024 will be offering up to 26 less connec- tions to passengers. However, not all of these 26 connections will be entirely wiped out from Malta's air connectivity," the Central Bank analysis points out. "Seven alternative airlines – both low-cost and flag carri- ers – offer flights to 15 of such destinations. Some of these connections are also served by multiple airlines." Air connectivity in the COV- ID year of 2020 declined signif- icantly due to a combination of demand and supply factors, while various airlines down- sized their operations from Malta. In 2019, Malta was directly connected to 125 airports, of which 118 were to mainland Europe, four to the Middle East – Tel Aviv, Amman, Doha and Dubai – and three to Africa, namely Casablanca, Tunis and Cairo. By 2020, direct route connec- tivity fell by over 50 connec- tions to 70 direct flights, cou- pled with the decline in flight frequency and airline compe- tition, which compounded the negative effects of COVID-19. Crucially, connections to im- portant European hubs were still maintained, whilst Doha and Dubai were dropped, hin- dering onward travel to Asia and Australia. By 2023, country connectiv- ity stood at 34, yet notwith- standing this reduction in air- port and country connectivity, when compared to 2019, pas- senger movements through MIA increased significantly, with 7.8 movements that year, an increase of 500,000 com- pared to 2019. Moreover, each month during 2023 outperformed the corre- sponding one of 2019, with the largest percentage increase ex- perienced in December. "Significantly, this means that passenger traffic exceeded the 500,000 mark in Novem- ber and December for the first time in the airport's history. Such increases in passenger movements occurred despite the loss in airport connectivity. This signals that movements to and from long-standing connections intensified," Sant writes in his report. This intensification, together with further route recovery and connectivity developments, is estimated to lead to some 8 million passenger movements in 2024, with MIA also starting a six-year €250 million invest- ment to upgrade airport facil- ities. A reduction in competition may still lead to a negative impact on connectivity, since fewer seats are available. And since certain airlines end up having a monopoly on some routes, travellers may face ad- verse price effects. Rationalised KM Malta routes better suited for post-COVID connectivity