Rationalised KM Malta routes better suited for post-COVID connectivity

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 connectivity to the rest of the globe.

In an analysis of airline connectivity in the post-COVID economy, the Central Bank said that with Malta’s size and population making long-haul routes unprofitable and unsustainable in the long run, it was crucial to rely on indirect connectivity 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 senior economist Kurt Sant says.

Sant writes in his analysis that the overall impact on connectivity 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 operate a standing fleet of eight Airbus A320 aircraft, while significantly 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 Italy, 48 to France, 44 to the UK and 40 to Germany. The strategy 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 mainly profitable routes.

Although passenger numbers in 2023 have surpassed those in 2019, Malta’s air connectivity remains below its pre-pandemic levels, with connections to seven countries having been severed, especially in North Africa and the Middle East.

“In 2024, the new national airline replacing Air Malta will cut back further on its destination offering. However, due to the availability of indirect connections and the presence of alternative airlines, Malta’s overall connectivity is not expected to be severely impacted. However, this does result in a less competitive environment on certain routes and countries, which may hurt consumers,” the CBM analysis says.

In fact, from up to 43 direct connections offered to passengers in 2019 Air Malta halved its connectivity to 22 airports in 2023.

In addition to this downsizing, the new national airline will reduce six further connections in 2024, concentrating its operations on 17 of the profitable routes currently operated by Air Malta. However, five routes – Rome Fiumicino, Munich, Paris Charles-de-Gaulle, Zurich and Vienna – will experience increased flight frequencies.

“Thus, compared to 2019, the national carrier in 2024 will be offering up to 26 less connections 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 carriers – offer flights to 15 of such destinations. Some of these connections are also served by multiple airlines.”

Air connectivity in the COVID year of 2020 declined significantly due to a combination of demand and supply factors, while various airlines downsized 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 connectivity fell by over 50 connections to 70 direct flights, coupled with the decline in flight frequency and airline competition, which compounded the negative effects of COVID-19. Crucially, connections to important European hubs were still maintained, whilst Doha and Dubai were dropped, hindering onward travel to Asia and Australia.

By 2023, country connectivity stood at 34, yet notwithstanding this reduction in airport and country connectivity, when compared to 2019, passenger movements through MIA increased significantly, with 7.8 movements that year, an increase of 500,000 compared to 2019.

Moreover, each month during 2023 outperformed the corresponding one of 2019, with the largest percentage increase experienced in December.

“Significantly, this means that passenger traffic exceeded the 500,000 mark in November 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 investment to upgrade airport facilities.

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 adverse price effects.