Strategic partners could help Air Malta reduce costs, CEO tells conference

Air Malta chief executive Peter Davies has advocated airline alliances as a useful way for small, flag carriers - like national airline Air Malta - to protect their brand while reducing their costs.

Addressing a SITA conference in Brussels earlier this week, Davies told travel intelligence website Skift that an alliance of small airlines, particularly flag carriers, could reduce costs.

"If you take a lot of small airlines, particularly flag carriers, which are regarded perhaps as weak because they don't make enough money or whatever, then they have a disproportionate amount of fixed overhead simply because often you need a certain base in which you need to fly airplanes, whether it is one airplane or 100 airplanes.

"... Perhaps there is a different way in which you can reduce those costs, dilute those costs, by a band of companies coming together, which allows the brand perhaps to be protected, but all the operational costs taken to one side and run almost as if another airline."

But differently from the classic form of airline alliances like OneWorld or SkyTeam, Davies is suggesting a strong management team that runs a number of brands, centrally.

Taking his cue from his experience at Air Malta, which is needed to support the Maltese economy by flying in tourists, he puts forward the case that management is also primarily responsible for branding.

"Our job, in that instance, which is why it is important from the brand's perspective, is to sell Malta. The values of Air Malta have to represent our country. And, therefore we have a job, we are an ambassador, the guide, the broker. We have to attract people to fly to the country.... we are an extension obviously to the country and we have a specific role in trying to generate a sense of interest by creative marketing opportunities"

Davies however ruled out the chances that a small player like Air Malta could achieve the economies of scale of low-fares giants like Ryanair and Easyjet.

"They are two different beasts. There is always going to be a price difference, and that price difference has to be justified through the levels of service we provide our passengers, our customers. We have to make sure that those values of Malta, the fact that we are guide, ambassador and broker, there is a demonstrable difference. The values of Air Malta are Malta."

Davies said Air Malta's losses had fallen from €40 million to €13 million this year, at an operational level, and said the airline was working on network developments with other airlines.

"We can't act by ourselves. We are not in a position to join an alliance, and I think that's right for us for the moment. But, I think having strategic partners in the airline business and being able to seek ways in which we can dilute some of our costs while at the same time encouraging different growth that satisfies the country in terms of its strategic objectives and vision, and where the airline can be of significance is an important step forward, and we are beginning to work on that."