Knights to save Air Malta.

The following is my businessplan (BP) proposal on how to save Air Malta (KM).

I start with the premise that with its current BP, the airline cannot (profitably) survive. The problem is quite straightforward. NFAs*, particularly Ryanair, will continue to take traffic from KM because most travellers want lower fares.

That means they want fares at NFA levels. KM can offer these of course, and it already does offer low fares on some routes, or at some times — albeit not as low as Ryanair. But it probably cannot make money on them even at 100% load factors — because its operating costs are too high.

The prompt for change for KM should have been the announcements by some FSAs* in Europe (notably British Airways) to reduce their ‘frills’ on some (all?) of their intra-Europe flights. So that they can lower fares to better match Ryanair and the rest.

(I believe such plans may be misguided. Briefly — because not the subject of this report — BA should keep its full-service flights on certain routes and/or at certain times, where there is a demand for higher-cost FSA service. Say 0730 London-Frankfurt and FRA-LON and 1830 FRA-LON and LON-FRA by BA, and at other times of the day by a newly-created NFA subsidiary — which I would have named BAby.)

But back to KM.

There are two options, both of which involve KM establishing a subsidiary airline, which I name Knights. (I give Knights the KN 2-letter flight code, being close to Air Malta’s KM. Although one-time unauthorised domestic-China airline, China United, still owns ‘KN’ , it would sell, albeit initially asking for 6-times its market value…)

KN would be either the name of an NFA, leaving KM as the FSA. Or the opposite. However, I believe KN is the better name for the new FSA operating intra-Europe flights — because the name ‘Air Malta’ would obviously be always linked with Malta. For instance, a passenger might wonder why/what is this Air Malta operating London-Frankfurt as a BA flight? ‘Knights’ is neutral.

On that basis then, this is what KM and KN should do:

Air Malta, KM.

Reform as an NFA with new staff — some could be hired from existing staff, although probably not many, because salaries would be lower and the work regime harder. Follow other requirements that we list for NFAs, see below. Aircraft could be either leased from KN, which would have taken over the current KM fleet, or others, or a mix. Aer Lingus, before it was bought by ICAG (the group that includes British Iberia Vueling others), did some of this.

Knights, KN.

An FSA operating shorthaul intraEurope flights. This would include some existing KM flights — on those routes from Malta which have a primarily business load. Possibly some, but not all, flights from Malta to Frankfurt, London, Paris, Rome.

More importantly, though, KN would operate those intraEurope FSA flights abandoned as FSA flights by, say, BA. But under contract, and under the FSA’s flight codes, say BA.

In earlier reports, I have described how inflight services should be provided on these under-contract operations.

For instance, I suggested on flights to Paris operated by KN under contract for Air France (say London/Frankfurt/Zurich-Paris), there would be at least one AF cabin crew member in AF crew uniform on the KN-operated flight. And the flight service would include, say, more French touches, such as a wider choice of (French) wines, champagne, baguettes, croissants — and a haughty attitude?

And the equivalent on KN flights operating under contract for British (baked beans, ugh), Lufthansa, etc.

The commercial frills/perks for travellers would be the same as if he/she were flying BA etc — frequent flyer programs, lounges, ground-service, etc.

Airlines such as BA thereby keep their higher-yield passengers who still prefer FSA service and the accompanying higher air fares — albeit because probably their companies not themselves, are paying the higher fares.

Most current KM staff could probably stay on at KN, although some adjustments to working conditions and pay would probably be necessary. As noted above, aircraft could be either current KM aircraft or leased from the reformed KM, or vice versa.

*Notes:

-FSA = full-service-airline. Offering first/business/economy, travel agency bookings, meals/bookings/baggage/cancellations included, etc. As its name indicates — full service.

-LCA = low-cost-airline. (Not a no-frills-airline; see next.) An FSA but with lower operating costs — cheaper longer-hours flight-deck crew, younger/new longer-hours cabin crew, tighter cost control (twinned 3-star hotel rooms, for instance), fewer fare types, which may have first and business cabins, and which allows bookings through travel agencies etc. If relevant, usually similar to the parent airline, but a different name, and competition against parent airline allowed.

-NFA = no-frills-airline. We believe that among the many essential elements that make a successful NFA are: market freedom in terms of routes and aircraft choice; single aircraft type; where relevant, competition against parent airline allowed; fares that are extremely low when booked at least three months in advance, say US$25; one fare at one time (no wholesale rates, travel agency commissions, etc); no refunds; no service frills; single economy-class cabin; no seat selection; two toilets for 150-seat aircraft; 25-minute turnaround time; cabin crew do daytime cabin cleaning; name and flight change charged at least US$25 each; no trade shows; plenty of consumer advertising and promotion; and much more.

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